Question: I 2. 1 0 The dat a file mexic o. dat contains real GDP for Mexico and the Unites States from the first quarter of

I 2. 1 0 The dat a file mexic o. dat contains real GDP for Mexico and the Unites States from the first quarter of 1980 to the fourth quarter ot2006. Both series have been standardized so that the average value in 2000 is 100.

(a) Perform the test for cointegration between Mexico and the Unites States for all three test equations in (12.8). Are the results consistent?

(b) The theory of convergencein economic growth suggestst he two GDPs shouldb e proportional and cointegrated. That is, there should be a cointegrating relationship that does not contain an intercept or a trend. Do your results support this theory?

(c) If the variables iue not cointegrated, what should you do if you are interested in testing the relationship between Mexico and the United States

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