In the distributed lag model, the dynamic causal effect
A)is the sequence of coefficients on the current and lagged values of X.
B)is not the same as the dynamic multiplier.
C)is generated by choosing different truncation points for the HAC standard errors.
D)requires estimation of the model by Cochrane-Orcutt method.

Question

Quizplus · Accepted Answer

In the distributed lag model, the dynamic causal effect refers to the sequence of coefficients on the current and lagged values of X. It captures how changes in X affect the response variable over time. The choice of truncation points for the HAC standard errors and the estimation method (e.g., Cochrane-Orcutt) are not directly related to the concept of dynamic causal effect. The dynamic multiplier, on the other hand, refers to the ratio of the current and lagged values of X in the long run, and is conceptually different from the dynamic causal effect.

In the Distributed Lag Model, the Dynamic Causal Effect