Before jumping to johansen cointegration test you first need to understand Cointegration.
If two dependent variables are associated with each other, that is, shows the same trend and side by side their independent variable are dissimilar then this kind of association is known as Co-integration.
To investigate Johansen cointegration by using EViews, you need to follow below steps:
1. Open Eviews6.exe
2. Click on File -> Open -> Foreign Data as Workfile…
3. Open the data file “broadband_1 “ by selecting through the path
C:\Program Files\SPSSInc\Statistics17\Samples\English
4. Select MARKET_1 and MARKET_2 -> OK
5. Click on Quick -> Group Statistics -> Cointegration Test
6. Write down the two variables in which you want to check co-integration and click OK twice
7. Following output for johansen cointegration test will be visible:
We will only study the following table in order to interpret the result:
From the above Johansen cointegration test by using EViews, we can conclude following results:
Since Max-Eigen Stats (8.836) < Critical value at 5% (14.07) and 1% (18.63), therefore the co-integration does not exists in the current lag (None). Similarly, Max-Eigen Stats (0.014) < Critical value at 5% (3.76) and 1% (6.65), therefore co-integration does not exists in previous lags as well (At most 1).
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Very very rewarding. So useful for my current paper that what previously frightened me is now subdued.
This has made my paper so comfortable to write, especially with the interpretations. What previously appeared so confusing and difficult to get over is now subdued. Ever grateful.