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What Is the Long Run Solution to the Following Dynamic Δ\Delta

Question 13

Multiple Choice

What is the long run solution to the following dynamic econometric model? Δ\Delta yt = β\beta 1 + β\beta 2 Δ\Delta X2t + β\beta 3 Δ\Delta X3t + ut


A) y = β\beta 1 + β\beta 2X2 + β\beta 3X3
B) yt = β\beta 1 + β\beta 2X2t + β\beta 3X3t
C) y = - ( β\beta 2/ β\beta 1) X2 - ( β\beta 3 / β\beta 1) X3
D) There is no long run solution to this equation

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