Question: Consider that Y and X are non-stationary I(1) variables and they are cointegrated. Interpret the coefficients of following two estimated models. Calculate in how many

Consider that Y and X are non-stationary I(1) variables and they are cointegrated. Interpret the coefficients of following two estimated models. Calculate in how many periods the deviations from equilibrium will return back.

Yt = 6.5 - 1.5Xt

(3.5) (-3.75)

ΔYt = 0.55ΔXt - 0.25u(̂t-1)

(2.5) (-3.25)

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