Hey
I am testing for absolute form PPP, that is I have to keep the coefficients
on nominal exchange rate, domestic price level and foreign price level
(1,1,-1).
I have tried to use
vec exchange rate, domestic price level foreign price level, trend (rt)
bc(1,1,-1)
However, I have been kept told the constraint 1 is not identified.
Could anyone help me out?
Many thanks in advance
Odette
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