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Consider the simple VAR(1) linking the growth rate of CO2 emissions
and the growth rate of real GDP:
\begin{align*}
\Delta {\tt gdp}_t = \phi_{10} + \phi_{11} \Delta{\tt gdp}_t + \phi_{12}
\Delta {\tt co2}_{t-1} + v_{1t}\\
\Delta {\tt co2}_t = \phi_{20} + \phi_{21} \Delta{\tt gdp}_t + \phi_{22}
\Delta {\tt co2}_{t-1} + v_{2t}
\end{align*}
Lowercase variable names denote logarithms, and \(v_{1t}\) and \(v_{2t}\)
are disturbance terms. Equation-by-equation ordinary least squares produces
the following results:
|
Consider the simple VAR(1) linking the growth rate of CO2 emissions
and the growth rate of real GDP:
\begin{align*}
\Delta {\tt gdp}_t = \phi_{10} + \phi_{11} \Delta{\tt gdp}_{t-1} + \phi_{12}
\Delta {\tt co2}_{t-1} + v_{1t}\\
\Delta {\tt co2}_t = \phi_{20} + \phi_{21} \Delta{\tt gdp}_{t-1} + \phi_{22}
\Delta {\tt co2}_{t-1} + v_{2t}
\end{align*}
Lowercase variable names denote logarithms, and \(v_{1t}\) and \(v_{2t}\)
are disturbance terms. Equation-by-equation ordinary least squares produces
the following results:
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