When Estimating a VEC Model Using a Two Step Least

question 4

Multiple Choice

When estimating a VEC model using a two step least squares process,what is the first step?

• A)use least squares to estimate the cointegrating relationship
• B)use least squares to estimate first differences as a function of estimated residuals
• C)use least squares to estimated residuals as a function of first differences
• D)use least squares to estimate first differences as a function of lagged differences

---

Definitions:

Equity Securities

Financial assets representing ownership interest in an entity, such as stocks.

Statement of Cash Flows

A report detailing how alterations in balance sheet items and revenues influence the cash and cash equivalents, segmented into operations, investments, and funding activities.

Accounting Period

The period of time for which an income statement is prepared.

Uses of Cash

Refers to the various ways in which a business or individual applies its cash resources, including operational expenses, investment activities, and financing costs.