Question: 1. Suppose that Yt follows a stationary AR(1) model with ![1982_AR 1.png](https://secure.tutorsglobe.com/CMSImages/1982_AR 1.png)
![1291_AR.png](https://secure.tutorsglobe.com/CMSImages/1291_AR.png)
2. A version of the permanent income theory of consumption implies that the logarithm of real GDP ( Y) and the logarithm of real consumption (C) are cointegrated with a cointegrating coefficient equal to 1 Explain how you would investigate this implication by (a) plotting the data and (b) using a statistical test.