There are seven land regions in Texas. You have access to quarterly land prices of all seven regions for past 10 years. Now, you have been provided the task of establishing long-run relationships with these price series. As a pilot study, you have picked prices from two regions, Panhandle Plains and South Texas Plains. Explain how you would investigate long-run price relationships among land prices of these two regions. Use graphs and equations to explain the methodology as thoroughly as possible. (Note: you may want to conduct Dickey-Fuller tests to test for

non-stationarity property of each land price series and then conduct the contemporaneous co- integrating regression to determine if the residuals are stationary (this is the Engle-Granger two step

method). Assuming that both price series are non-stationary and residuals are stationary in the contemporaneous co-integrating regression, show the error correction models (ECMs) for Panhandle price series as well as South Texas price series). If your model finds that South Texas prices adjust to establish the long-run equilibrium between the two series, please show the leader and follower of these two markets in a causality diagram.