Question: With the updated data set from Exercise 1, find the cointegrating relation between production and consumption by implementing the test for cointegration. Is it different

With the updated data set from Exercise 1, find the cointegrating relation between production and consumption by implementing the test for cointegration. Is it different from the cointegrating relation in Exercise 1? If it is, go ahead and find the best vector error correction model, construct the 1-year-ahead forecast, and compare your results with those from Exercise 1.

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Then we compute the residuals of the OLS regression that is t log Y t 0 1 log C t where 0 and 1 are 0913478 and 0940365 reported in Table 3 In we plot ... View full answer

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