Inverse Roots of AR Characteristic Polynomial

[konkon7]

hello,
I want to ask something about Inverse Roots of AR Characteristic Polynomial in the context of VECM. I know that all the dots should have been inside the circle on inverse roots graph in order to say that impulse responses are good. however in my example lets say : 50 dots are inside the circle and 1 dot is touching the circle in the positive x axis. is this good? how is interpreted?

thanks in advance

[trubador]

That is fine. VECM imposes n-r unit roots. So, if you have 2 variables and a single cointegration relationship then characteristic polynomial should have one root equal to 1. You can refer to any textbook for more detailed explanation.