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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More recent literature tries to identify the determinants of leverage adjustment speed.
2) The market is in a stable state if the output adjustment speed parameters are in the stable region.
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.
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.
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.
i,t]) in the tth review; population growth has attained the reasonable scale, and the adjustment speed is also reasonable.
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.
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.
The estimated adjustment speed can be obtained from the optimal solution of quasifixed input behavior rewritten by the reparameter approach to derive the accelerator system.
The price adjustment speed is determined as a function of foreign demand responsiveness, the appropriate discount rate, and an adjustment cost parameter.
where [Mu] [greater than] 0 is the adjustment speed for production.