An integral correction mechanism (based on liquid assets) related to servomechanistic control theory improved the DHSY specification and explained the role of inflation as measuring the erosion of the real value of nominal assets, leading to the HUS model. Seasonal indicators were re‐introduced. An explicit progressive research strategy for empirical modelling was proposed, sustained by encompassing.
Keywords: consumer expenditure; DHSY; empirical modelling; encompassing; inflation; integral correction mechanism; progressive research strategy; seasonality
Chapter. 10922 words. Illustrated.
Subjects: Econometrics and Mathematical Economics
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