Critical values for an F-test for cointegration in a multivariate model

C-Tier
Journal: Applied Economics
Year: 2005
Volume: 37
Issue: 3
Pages: 265-270

Authors (2)

Athina Kanioura (not in RePEc) Paul Turner (Loughborough University)

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Critical values for a test for cointegration are generated based on the joint significance of the levels terms in an error-correction equation. It is shown that the appropriate critical values are higher than those derived from the standard F-distribution. The power properties of this test are compared with those of the Engle-Granger (Econometrica, 55, 251-76, 1987) test and Kremers et al.'s (Oxford Bulletin of Economics and Statistics, 54(3), 325-48, 1992) t-test based on the t-statistic from an error-correction equation. The F-test has higher power than the Engle-Granger test but lower power than the t-form of the error-correction test. However, the F-form of the test has the advantage that its distribution is independent of the parameters of the problem being considered. Finally, a test is considered for cointegration between UK and US interest rates. It is shown that the F-test rejects the null of no cointegration between these variables although the Engle-Granger test fails to do so.

Technical Details

RePEc Handle
repec:taf:applec:v:37:y:2005:i:3:p:265-270
Journal Field
General
Author Count
2
Added to Database
2026-01-29