Disequilibrium models constitute an extensive area of research, about which numerous papers have been written. Some of the early econometric models have been surveyed by Maddala and Nelson (1974). A more extensive and
up-to-date survey has been given by Quandt (1982). See, also, the article by Hartley (1976a) for a connection between a disequilibrium model and the standard Tobit model. Here we shall mention two basic models first discussed in the pioneering work of Fair and JafFee (1972).
The simplest disequilibrium model of Fair and JafFee is a special case of the Type 5 model (10.10.1), in which y*,- is the quantity demanded in the ith period, y*i is the quantity supplied in the ith period, and y* = y* — y*...Read More