What is the long run solution to the following dynamic econometric model?$\Delta$y_t = $\beta$₁ + $\beta$₂$\Delta$X₂_t + $\beta$₃$\Delta$X₃_t + u_t A) y = $\beta$₁ + $\beta$₂X₂ + $\beta$₃X₃ B) y_t = $\beta$₁ + $\beta$₂X₂_t + $\beta$₃X₃_t C) y = - ($\beta$₂/$\beta$₁) X₂ - ($\beta$₃/$\beta$₁)X₃ D) There is no long run solution to this equation

Question

Quizplus · Accepted Answer

The given model is in first differences (indicated by Δ), which means it describes short-term changes rather than long-term levels. Therefore, there is no long-run solution in levels for this model.

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

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