Following VAR model is estimated for consumption (c) and income (y). VAR (1) model: ct [ C+

Following VAR model is estimated for consumption (c) and income (y).

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VAR (1) model: ct [ C+ ] = [ 7.058 ] + [0.015_0440 ] [C+1] + [ & ct] Ect. yt 7.657] 0.283] The variance covariance Matrix of the residual vector Êt= (Éct, Eyt) is: a = 50.22. V = 0.12. 0.28- The Cholesky decomposition of _^2= V¹ V²¹ gives the matrix 0.12 √ 2.13. L-1.18- 2.16 a-) Calculate the two period impulse response of consumption one unit shock in output. and income to a decomposition of consumption for two b-) Obtain the variance periods ahead. VAR (1) model: ct [ C+ ] = [ 7.058 ] + [0.015_0440 ] [C+1] + [ & ct] Ect. yt 7.657] 0.283] The variance covariance Matrix of the residual vector Êt= (Éct, Eyt) is: a = 50.22. V = 0.12. 0.28- The Cholesky decomposition of _^2= V¹ V²¹ gives the matrix 0.12 √ 2.13. L-1.18- 2.16 a-) Calculate the two period impulse response of consumption one unit shock in output. and income to a decomposition of consumption for two b-) Obtain the variance periods ahead.

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a To calculate the twoperiod impulse response of consumption and income to a oneunit shock in ... View the full answer