Hi,
I am having trouble interpreting the impusle response function of how one logged differntiated variable affects another logged differentiated variable.
I have used Cholesky ordering and are interested in how a one s.d. shock in change in oil price affects the GDP growth rate of a country. (both variables logged + first differentiated)
Our results:
y axis shows a response of 0.011 --> Does this then imply that: one s.d. shock in change in oil price increases the growth rate with 1.1%?
I would really appreciate any answers you can give us! THANK YOU!!
Interpreting the Impulse Response Function
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