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(o) The forecast error variance decomposition of the VAR is shown below. What can you infer from this result? [2] Variance Decomposition using Choleskv [cl.f.

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(o) The forecast error variance decomposition of the VAR is shown below. What can you infer from this result? [2] Variance Decomposition using Choleskv [cl.f. adjusted) Factors Percent DGPRICE variance dueto DGPRICE Innovation Percent DGPRICE variance due to INF Innovation 100 100 80 80 so so 40 40 20 20 U 0 1 2 3 4 5 6 7 s 9 10 1 2 3 4 5 5 ? s 9 10 Percent I NF variance due to D6 PRICE Innovation Percent INF variance due to INF Innovation 100 100 __ 8U 80 so so at] 40 20 20 U -'_ 0

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