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BrittneyABuell BrittneyABuell
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6 years ago
Your textbook so far considered variables for cointegration that are integrated of the same order.
 
  For example, the log of consumption and personal disposable income might both be I(1) variables, and the error correction term would be I(0), if consumption and personal disposable income were cointegrated.
  (a) Do you think that it makes sense to test for cointegration between two variables if they are integrated of different orders? Explain.
  (b) Would your answer change if you have three variables, two of which are I(1) while the third is I(0)? Can you think of an example in this case?
  What will be an ideal response?
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Andie95Andie95
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BrittneyABuell Author
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6 years ago
Thanks for your help!!
kh540941
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Yesterday
Smart ... Thanks!
carston
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2 hours ago
You make an excellent tutor!
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