Global stability of dynamic models |
| |
Authors: | Wojciech GrabowskiAleksander Welfe |
| |
Institution: | University of Lodz, 41 Rewolucji 1905r., 90-214 Lodz, Poland |
| |
Abstract: | A necessary and sufficient condition for global stability of dynamic models is summability to one of the long-run elasticities and cointegration. The short-run coefficients automatically satisfy the homogeneity condition. A relevant restriction has to be imposed in the parameter estimation process; otherwise, the ratios of variables appearing in the model will tend to either infinity or zero, which is economic nonsense in most cases. This conclusion is particularly important for the ECM or VEC (SVEC) models that decompose behavior into long and short-run parts. |
| |
Keywords: | C32 C51 |
本文献已被 ScienceDirect 等数据库收录! |
|