Muellbauer,and Lattimore (1994) show that this implies an error-corr-ection form close to that of DHSY (1978), but in an expectational formulation,(34) i.
This also reduces the negative inflation effect in the DHSY model of consumption, which is probably capturing the same phenomenon (see Hendry in this issue).
On the other hand, as originally argued in DHSY (1978), differencing can also remove valuable long-run information in the data.
34) An alternative way of expressing the link between DHSY and credit constraints was considered by Muellbauer (1983) who showed that the shadow price of the credit constraint entered the Euler equation and that the shadow price was positively related to ([E.
For comparison, the residual standard deviations in DHSY and in HUS were around 0.
Under the null hypothesis that the DHSY model is valid and that their data set is accurate, the revisions are unrelated noise so should not contribute to the explanation, whereas the revisions should help explain the DHSY specification fitted to the recent vintage.
are insignificant if added to the DHSY model on its own data F(5, 47) = 0.