Starting from a linear error correction model the stability and linearity of a German M1 moneyt demand function are investigated, applying smooth transition regression techniques. Using seasonally unadjusted data from 1961 (1) to 1990 (2) it is found that the money demand equation is both linear...

Nonlinearity, and regime-switching behavior in particular, and structural change have often been perceived as competing alternatives to linearity. In this paper we propose a model, based on the principle of smooth transition, that allows for regime-switching behavior in conjunction with...

A smooth transition autoregressive model is estimated for the Southern Oscillation Index, an index commonly used as a measure of El Niño events. Using standard measures there is no indication of nonstationarity in the index. A logistic smooth transition autoregressive model describes the most...