Disequilibrium Macroeconomics (accelerations)in money-stock growth are incorrectly interpreted as downward (upward)shifts in short-run money demand. If the shifts in money demand noted in the previous paragraph were actually shifts in monetary policy, then my hypothesis suggests contraction ary monetary policy during the first two periods and expansionary policy during the latter two. Moreover, these policy shifts need no have been planned. The first two periods correspond roughly to inflation build-ups after oil- price shocks. If oil-price shocks generate xpected inflation, then a given monetary policy becomes more contractionary (less expansionary)ex post. In addition, the latter two periods correspond to a softening of oil prices and of domestic in flation. In sum, sustained deviations of money-stock growth from its trend generate money-market disequilibria; the demand for money dusts to the new policy regime as the interest rate, real income and the price level change In the next section, I describe the econometric procedures developed for handling market disequilibria and show how these procedures can be modified to address buffer stocks in a macro- economic setting. Inferences concerning the nature of the high au- tocorrelation in post-1973 estimates of money demand emerge from this discussion. I then incorporate relatively new econometric pro- cedures, cointegration and error-correction modeling, before mov ing to my empirical analysis. Section 3 discusses the data and eval uates the estimation results. Finally, Section 4 concludes the paper 2. Methodology Estimating Markets in disequilibrium Expanding on the analysis of Fair and Jaffee(1972), a number of authors estimate markets in disequilibrium( for example, Fair and Kelejian 1974; Maddala and Nelson 1974; Laffont and Garcia 1977 and Quandt and Rosen 1978), usually the mortgage market. The key assumption asserts that, when the market is in disequilibrium the observed quantity reflects the minimum of demand and supply quantities at the given price (that is, the short-side rule). Deter ining whether a demand or supply observation occurs depends on the direction of movement in the market price. If the observed price exceeds the market-clearing level, then the price falls and the observed quantity presumably lies on the demand curve and vice ersa. Estimation of the money market in disequilibrium differs in two important respects. First, the short-side rule breaks down; theDisequilibrium Macroeconomics (accelerations) in money-stock growth are incorrectly interpreted as downward (upward) shifts in short-run money demand. If the shifts in money demand noted in the previous paragraph were actually shifts in monetary policy, then my hypothesis suggests contraction￾ary monetary policy during the first two periods and expansionary policy during the latter two. Moreover, these policy shifts need not have been planned. The first two periods correspond roughly to inflation build-ups after oil-price shocks. If oil-price shocks generate unexpected inflation, then a given monetary policy becomes more contractionary (less expansionary) ex post. In addition, the latter two periods correspond to a softening of oil prices and of domestic in￾flation. In sum, sustained deviations of money-stock growth from its trend generate money-market disequilibria; the demand for money adjusts to the new policy regime as the interest rate, real income, and the price level change. In the next section, I describe the econometric procedures developed for handling market disequilibria and show how these procedures can be modified to address buffer stocks in a macro￾economic setting. Inferences concerning the nature of the high au￾tocorrelation in post-1973 estimates of money demand emerge from this discussion. I then incorporate relatively new econometric pro￾cedures, cointegration and error-correction modeling, before mov￾ing to my empirical analysis. Section 3 discusses the data and eval￾uates the estimation results. Finally, Section 4 concludes the paper. 2. Methodology Estimating Markets in Disequilibrium Expanding on the analysis of Fair and Jaffee (1972), a number of authors estimate markets in disequilibrium (for example, Fair and Kelejian 1974; Maddala and Nelson 1974; Laffont and Garcia 1977; and Quandt and Rosen 1978), usually the mortgage market. The key assumption asserts that, when the market is in disequilibrium, the observed quantity reflects the minimum of demand and supply quantities at the given price (that is, the short-side rule). Deter￾mining whether a demand or supply observation occurs depends on the direction of movement in the market price. If the observed price exceeds the market-clearing level, then the price falls and the observed quantity presumably lies on the demand curve and vice versa. Estimation of the money market in disequilibrium differs in two important respects. First, the short-side rule breaks down; the