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(i) The regression result of the error correction model is shown below where DCP=log(CPt)log(CPt1) and DEXRATE =log( EXRATE t)log( EXRATE t1). Dependent Variable: DEXRATE Method:

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(i) The regression result of the error correction model is shown below where DCP=log(CPt)log(CPt1) and DEXRATE =log( EXRATE t)log( EXRATE t1). Dependent Variable: DEXRATE Method: Least Squares Date: 09/26/21 Time: 18:56 Sample (adjusted): 2010M03 2021M08 Included observations: 138 after adjustments Explain what is the variable U(1) in the EViews output of the error correction model? [2] U(1) refers to the previous element of the independent variable It is the variable interpreted as the slope of the relation between the corresponding independent variable and the dependant variable, assuming all other variable remain constant (j) Interpret the slope coefficient of the U(-1). [2] (i) The regression result of the error correction model is shown below where DCP=log(CPt)log(CPt1) and DEXRATE =log( EXRATE t)log( EXRATE t1). Dependent Variable: DEXRATE Method: Least Squares Date: 09/26/21 Time: 18:56 Sample (adjusted): 2010M03 2021M08 Included observations: 138 after adjustments Explain what is the variable U(1) in the EViews output of the error correction model? [2] U(1) refers to the previous element of the independent variable It is the variable interpreted as the slope of the relation between the corresponding independent variable and the dependant variable, assuming all other variable remain constant (j) Interpret the slope coefficient of the U(-1). [2]

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