The data set contains monthly observations on interest rates on various financial instruments from July 1954 to October 2017. This exercise uses three of these interest rates: bill (interest rate on 3-month Treasury bills), r3 (interest rate on 3-year Treasury securities), and r10 (interest rate on 10-year Treasury securities). A subset of these data was used in the lecture to illustrate the Engle-Granger methodology. This exercise asks you to estimate an error-correction model using the Johansen approach. (a). What is your prior about these interest rates based on an economic theory, such as the term structure of interest rates? Specifically, how many common trends would you expect? How many cointegrating vectors? 

I've included example data below

Date		Federal Funds	tbill	r1	r3	r10
7/1/54		0.80	0.72	0.84	1.47	2.30
8/1/54		1.22	0.92	0.88	1.49	2.36
9/1/54		1.06	1.01	1.03	1.60	2.38
10/1/54		0.85	0.98	1.17	1.72	2.43
11/1/54		0.83	0.93	1.14	1.75	2.48
12/1/54		1.28	1.15	1.21	1.81	2.51
1/1/55		1.39	1.22	1.39	1.99	2.61
2/1/55		1.29	1.17	1.57	2.12	2.65