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Disequilibrium, self-selection, and switching models

Maddala, G. S. (1986) Disequilibrium, self-selection, and switching models. In: Handbook of Econometrics. Handbooks in Economics. Vol.3. No.2. Elsevier Science Publishers B. V. , pp. 1634-1688. ISBN 978-0-444-86187-0.

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This chapter reviews the recent literature on disequilibrium and selectivity models. The cornerstone of the disequilibrium models is the minimum condition. One of the most disturbing points in the empirical applications is that the disequilibrium models have been mechanically applied with no discussion of what disequilibrium is due to and what the consequences are. In spite of all the limitations, the model has been the model with the most empirical applications. For instance, Sealy used the model to study credit rationing in the commercial loan market. It is used to estimate demand for money and savings functions in centrally planned economies and to study the demand for consumption goods in centrally planned economies. The main application of the methodology of disequilibrium model is to regulate markets and centrally planned economies, where there are price and quantity regulations. The chapter discusses the case of controlled prices and shows the way the analysis can be applied to credit markets with interest rate ceilings.

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Additional Information:© 1986 Elsevier B.V. This chapter was first prepared in 1979. Since then Quandt (1982) has presented a survey of disequilibrium models and Maddala (1983a) has treated self-selection and disequilibrium models in two chapters of the book. The present paper is an updated and condensed version of the 1979 paper. If any papers are not cited, it is just through oversight rather than any judgment on their importance. Financial support from the NSF is gracefully acknowledged. Formerly SSWP 303.
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Series Name:Handbooks in Economics
Issue or Number:2
Record Number:CaltechAUTHORS:20171120-144131129
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83358
Deposited By: Jacquelyn Bussone
Deposited On:20 Nov 2017 23:06
Last Modified:15 Nov 2021 19:57

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