adjustment speed

adjustment speed

the rate at which MARKETS adjust to changing economic circumstances. Adjustment speeds will tend to vary between different types of market. For example, in the case of the FOREIGN EXCHANGE MARKET, the exchange rate of a currency will tend to adjust rapidly to EXCESS SUPPLY or EXCESS DEMAND for it. A similar rapid response tends to characterize COMMODITY MARKETS and MONEY MARKETS, with commodity prices and INTEREST RATES changing quickly as supply or demand conditions warrant. Product markets (see PRICE SYSTEM) tend to adjust more slowly because the prices of products are usually fixed administratively and are generally changed infrequently in response to major supply or demand changes. Finally, some commodity markets, in particular the LABOUR MARKET, tend to adjust more slowly still because wages tend to be fixed through longer-term collective bargaining arrangements. See WAGE STICKINESS.
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References in periodicals archive ?
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2) The market is in a stable state if the output adjustment speed parameters are in the stable region.
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By allowing asymmetric and nonlinear adjustment processes, it was shown that the gap between the policy rate and the retail banking rates is the driving force of the interest rate pass-through so that when this gap is high the adjustment pace is rapid and when this gap is small the adjustment speed is slow.
Interest rate pass-through in Turkey and impact of global financial crisis: asymmetric threshold cointegration analysis
We consider the standard partial adjustment model for empirical analysis of adjustment speed because it can succinctly capture much of the lagged adjustment to new information.
Stock market adjustment to earnings announcement in the presence of accounting irregularity allegations
Nevertheless, linear techniques limit the adjustment between oil and stock prices to being symmetric, linear and continuous, and therefore the adjustment speed to being time-invariant.
Nonlinear linkages between oil and stock markets in developed and emerging countries
i,t]) in the tth review; population growth has attained the reasonable scale, and the adjustment speed is also reasonable.
The causal relationship of population growth and land development: a case study in Southern Taiwan
Lowering euro area price adjustment costs to the del lower US level, while leaving employment adjustment costs constant, does not visibly affect the adjustment speed of real variables either.
Speed of adjustment to selected labour market and tax reforms
Indeed, due to the presence of frictions in the insurance market, the heterogeneity of insurers' expectations, the competition between insurers, and a strong interdependence between insurance markets, the insurance premium dynamics seem to be asymmetrical, discontinuous, and nonlinear with a time-varying adjustment speed.
Nonlinear cointegration relationships between non-life insurance premiums and financial markets
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The price adjustment speed is determined as a function of foreign demand responsiveness, the appropriate discount rate, and an adjustment cost parameter.
Exchange Rate Shocks and the Speed of Trade Price Adjustment
where [Mu] [greater than] 0 is the adjustment speed for production.
Investment in fixed capital and competitive industry dynamics

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