Should we Distinguish Between Static and Dynamic Long Run Equilibrium in Error Correction Models?

Susana Botas
Authors registered in the RePEc Author Service: Carlos Robalo Marques

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: This paper shows that there is no theoretical foundation to distinguish between static and dynamic long run equilibrium in error correction models with deterministically cointegrated variables, and so, that the so-called dynamic homogeneity restriction aimed at guaranteeing that the two solutions coincide, also lacks a theoretical justification. Examples in which dynamic homogeneity cannot hold are also discussed.

JEL-codes: C22 (search for similar items in EconPapers)
Date: 2002
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w200202

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