Explain the concept of cointegration, Econometrics

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Problem 1:

(a) Using examples explain the concept of cointegration.
(b) Explain the term ‘stationarity' and its importance.
(c) Differentiate between stochastic and deterministic trends?

Problem 2:

Write short notes on the following:

(a) Unit root tests
(b) 3 S's
(c) Spurious regression
(d) Dummy variable trap
(e) CLRM assumptions

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