Question: Question 3 (a) Analyse how the cross-correlation function (CCF) is used to determine the relationship between the series yt and the exogeneous series xt in

Question 3

(a) Analyse how the cross-correlation function (CCF) is used to determine the relationship between the series yt and the exogeneous series xt in a dynamic

regression.

(b) Discuss why it is necessary to "pre-whiten" the series xt and yt before checking

their relationship using the CCF.

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