Question: Use the data on Y = consumption and X = personal income from INCOME.XLS. Assume (perhaps incorrectly) that Y and X are cointegrated. (a) Estimate

Use the data on Y = consumption and X = personal income from INCOME.XLS.

Assume (perhaps incorrectly) that Y and X are cointegrated.

(a) Estimate an error correction model. Begin with a model containing a deterministic trend and p = q = 4 and then carry out statistical tests to find an appropriate ECM.

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