Question
Concept of cointegration
Answer :
Word Count : 244
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Cointegration is an econometric concept used to analyze long-run equilibrium relationships among non-stationary time series variables. Many macroeconomic and financial variables, such as GDP, consumption, interest rates, and prices, are integrated of order one, I(1), meaning they become stationary after first differencing. Regressing one non-stationary series on another may produce spurious results with high R² and significant t-values despite
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