In a VECM

question 17

Multiple Choice

In a VECM,

• A)past values of Yt - θ Xt help to predict future values of ΔYt and/or ΔXt.
• B)errors are corrected for serial correlation using the Cochrane-Orcutt method.
• C)current values of Yt - θ Xt help to predict future values of ΔYt and/or ΔXt.
• D)VAR techniques,such as information criteria,no longer apply.

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Definitions:

Population

The entire aggregation of items from which samples can be drawn for statistical measurement or inference.

Normal Distribution

A statistical distribution that is uniform around the average, indicating that observations close to the mean are more common than observations distant from the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; used in finance to quantify the risk of an investment.

Capital Gain

The profit earned from the sale of an asset, such as stocks or real estate, which exceeds its purchase price.