Nevertheless, the burden of correcting budgetary disequilibria is entirely carried out via changes in the average tax rate, rather than changes in government spending or policy mixes.
Section III presents our long-run sustainability analysis, while Section IV reports the fiscal authorities' reaction function to fiscal disequilibria.
Arghyrou and Luintel (2007) also implement smooth transition autoregression models where fiscal adjustment is conditional on whether fiscal disequilibria are large or small.
While it is certainly the case that in order to describe the alleged monetary disequilibria it is useful that the expression demand for money "must refer to peoples' desire to hold money balances and not just receive money in exchange," it is certainly not the case that in order to explain disequilibria in terms of the money relation, it is valid to do so without referring to peoples' desire for money in exchange.
When the money relation changes, disequilibria occur in these markets until such time as new PSRs are established, at which points the supply and demand for money are also temporarily in equilibrium.
A major problem with this argument is that monetary disequilibria are temporary phenomena, lasting only as long as it takes for individual markets to clear at the various PSRs.
These authors apply the threshold autoregression (TAR) and momentum threshold autoregression models (M-TAR) of Enders and Granger (1998) and Enders and Sildos (2001) to test the symmetry assumption of the ECM with respect to budgetary disequilibria.
Checking the robustness of the present results to asymmetric adjustment to budgetary disequilibria is important.
1] represents the effects of above-threshold budgetary disequilibria and [[rho].
It seems to me that many questions concerning medium-run disequilibria are properly discussed in a model that assumes exogeneity of the real wage rate and does not distinguish between traded and non-traded goods, but introduces a feedback from the foreign trade balance to the real interest rate [E.
I prefer to speak of disequilibria in the structure of prices and remuneration rates.
By emphasizing on the profitability of production we require that in macroeconomic models dealing with unemployment we concentrate on the medium run, consider the significance of disequilibria, study explicitly the determination of potential output and analyze the role of competitiveness.
The departures from both equilibria, represented by the residuals from the cointegrating equations, are included in error correction models, to capture the responses of expenditures and revenues to each of the two disequilibria.
Since the error correction terms capture each variable's response to disequilibria, the latter source of causal linkages becomes the central focus in investigations involving cointegrated series.
The issue in this study is one of political economy, concerning the adjustments of expenditures and revenues to budgetary disequilibria.