On the adjustment matrix in error correction models

Article Abstract:

Economic interpretation of adjustment matrix' estimates is most likely to be ineffective whenever an economic model involving interpretation of adjustment matrix elements under alternative normalizations of the cointegrating matrix is not considered. Consideration of such model is important since possibility exists that estimating the elements of adjustment matrix may not lead to an estimate of the speed of adjustment under some cointegrating matrix normalizations. The presence of serially correlated unobservable shocks also leads to ineffective interpretation of estimates of the adjustment matrix.

Research, Stochastic processes

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Is the persistence of shocks to output asymmetric?

Article Abstract:

A similarity was established between the persistence of positive and negative shocks to output. A modified unobserved components model revealed that such relationship varies significantly from from the research results made by Beaudry and Koop. A more reliable test of assymetry in the persistence of shocks was obtained due to threshold-disturbance models' capability to create an exact estimation of magnitude and sign of shocks.

Economic indicators, Stochastic systems

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The 'embodiment' controversy: a review essay

Article Abstract:

The 'embodiment' controversy between Jorgenson and Solow continues in the face of technologies' growing role in the production of capital goods. The controversy tackles the significance of capital-embodied technological change in relation to output growth. Evaluation of output growth from 1947 to 1994 revealed that 'embodiment' acts as a principal transmission mechanism of technological progress towards economic development.

Technological innovations

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