The Following Is Not an Appropriate Way to Tell Whether

question 11

Multiple Choice

The following is not an appropriate way to tell whether two variables are cointegrated:

• A)see if the two variables are integrated of the same order.
• B)graph the series and see whether they appear to have a common stochastic trend.
• C)perform statistical tests for cointegration.
• D)use expert knowledge and economic theory.

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Definitions:

Linear Regression

A statistical method for modeling the relationship between a dependent variable and one or more independent variables by fitting a linear equation to observed data.

Correlation Matrix

A table showing correlation coefficients between variables, indicating the strength and direction of relationships.

Regression Model

A statistical model that estimates the relationship between a dependent variable and one or more independent variables.

Regression Coefficients

Numeric values that represent the degree of change in the dependent variable expected for a one-unit change in one of the independent variables, holding other factors constant.