Error Correction Term (ECT) in VECM model
Posted: Sun Mar 02, 2014 8:19 am
I'm having difficulty understanding the meanings of short and long-run relationships between variables, especially the ECT in VECM model. What does ECT mean and does it belong to a dependent or independent variable? What is the long-run equilibrium in VECM model mean?
Could anybody explain it for me in an easy way? Thank you so much for your help.
Could anybody explain it for me in an easy way? Thank you so much for your help.