Your Textbook So Far Considered Variables for Cointegration That Are

question 35

Essay

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.

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