I am developing a model with 3 variables and I had a doubt:
I am working with two periods and obtained these results for Cointegration Rank Test:
- Trace test indicates 1 cointegrating eqn(s) at the 0.05 level
- Max-eigenvalue test indicates 2 cointegration eqn(s) at the 0.05 level
What is the meaning of two cointegration equations?
And with 3 variables, do I need two cointegration equations or just one cointegration equation?
Best Regards, José.
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