DHSY revisited: the role of asymmetries

Davidson et al.'s data set is used to demonstrate the existence of a signif icant asymmetry in the adjustment of consumption towards equilibrium. The G ranger-Lee and Escribano-Pfann methods of partitioning the error correction term are compared and it is shown that the latter produces better results in this case. It is concluded that adjustment is faster under conditions of recession than it is during boom periods.