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Question: 1. Suppose that Yt follows a stationary AR(1) model with 1982_AR 1.png

1291_AR.png

2. A version of the permanent income theory of consumption implies that the logarithm of real GDP ( Y) and the logarithm of real consumption (C) are cointegrated with a cointegrating coefficient equal to 1 Explain how you would investigate this implication by (a) plotting the data and (b) using a statistical test.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M92253446

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