The importance and application of Vector Error Correction Model (VECM)
10 min readFeb 13, 2024
The auto regressive category has three distinct models; let is clear our understanding of them using the table below.
Each model has its own strengths and applicability depending on the characteristics of the data and the problem statement. VAR is suitable for short-term dynamics, VECM for long-term equilibrium relationships, and ARDL for…