Time Series Econometrics Using Microfit 5.pdf May 2026

The output appeared:

D(LAGOS_CONSUMPTION) = 0.15 * D(LONDON_REMITTANCES) - 0.32 * ECT(-1) (short-run) (adjustment speed) That -0.32 was gold. It meant that 32% of any disequilibrium from last quarter was corrected this quarter. Shocks faded in about three quarters. But why was Lagos consumption not rising? She saw the answer: the short-run coefficient (0.15) was much smaller than the long-run (0.86). Remittances boosted consumption weakly in the short term—people saved or paid debt first. The PDF’s footnote warned: "Policy based on long-run elasticities alone is blind to liquidity traps." To convince policymakers, Aliyah needed a story. She turned to Impulse Response Functions (IRFs) . Time series econometrics using Microfit 5.pdf

In Microfit 5: . She ordered: REMITTANCES → CONSUMPTION (remittances cause consumption, not vice versa). The output appeared: D(LAGOS_CONSUMPTION) = 0