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Definition of Correlation
According to prof, king correlation means that between two series or group of data there exists some casual connection prof, king has also explained, If it is proved true that in a large number of instances two variables tend always to fluctuate in the same or in opposite direction, we consider that the fact is established that a relationship exists. This relationship is called correlation.
According to Boddington, Whenever some definite connections exist between the two or more group. Classes or series of data, there is said to be correlation.
E . Davenport has expressed his views as, the whole subject of correlation refers to the inter relation between separate character by which they tend in some degree, at least, to move together. Thus two or more variables are said to be correlated if the change in one variable result or associated with a corresponding changes in other variable.
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Question 1 Suppose that you have 150 observations on production (yt) and investment (it), and you have estimated the following ADL(3,2) model: (1 – 0.5L – 0.1L2 – 0.05L3)yt = 0.7
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