Econometric modelling in the presence of evolutionary change

A methodology is offered which can be used to construct an econometric mode l in the presence of structural change of an evolutionary type. The theoret ical basis for such modelling is drawn from the self-organisation approach and operationalised in the context of the logistic diffusion growth model. The latter is augmented to allow for the impact of exogenous effects upon b oth the diffusion rate and boundary limit. We show how the hypothesis of au gmented logistic diffusion can be falsified using econometric methods. An i llustrative case study is used, namely the growth and decline of Australian Building Society Deposits. With the aid of this example, it is shown how t he approach could be of use to both economic forecasters and regulators in conditions of structural change where conventional econometric methods are often inappropriate. JEL classification: C51, C53, E42, E47, G18, O31.