WebPeter W.G. Newman1 Professor of City Policy, Murdoch University, Perth, WA 6160, Australia Received 21 September 1998; accepted 19 February 1999 Abstract The use of … WebM. H. PESARAN, Y. SHIN AND R. J. SMITH I(O), purely I(1) or mutually cointegrated. ... modelling approach (Pesaran and Shin, 1999) is used to estimate our preferred ECM of average earnings. The plan of the paper is as follows. The vector autoregressive (VAR) model which underpins the analysis of this and later sections is set out in Section 2.

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