The cointegration hypothesis can be formulated in terms of the

**vector error correction model**as a reduced rank test.This definition appears very rarely and is found in the following Acronym Finder categories:

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The cointegration hypothesis can be formulated in terms of the **vector error correction model** as a reduced rank test.

After the long-run coefficients are identified, they are used to formulate the **vector error correction model** of the following generalized form: [DRLTA][y.

Accordingly, we use **vector error correction models** (VECMs) to jointly estimate the long-run relationship in a cointegrating vector and short-run effects in first-difference equations, respectively: [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] where the lags of first-difference endogenous variables minimize the Akaike information criterion (AIC), X is a vector of exogenous factors, [[epsilon].

Their approach begins with a **vector error correction model** (VEC), such as the following: [Delta][X.

Granger's (1991) Representation Theorem further implies that we should specify a **Vector Error Correction Model**, VECM, (instead of a VAR) in which causality is detected among the variables in at least one direction.