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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Definitions:

Alimony

Financial support that one spouse is legally obligated to provide to the other during or after the dissolution of a marriage.

Physical Custody

A legal term referring to the living arrangements of a child and the rights of a parent or parents to have the child live with them.

Court-ordered Support

Financial or other support mandated by a court for the benefit of a child, spouse, or former spouse following a divorce or separation.

Child-support Laws

Regulations that mandate financial support from one parent to another for the upbringing of their mutual child.