Where = the lagged error-correction term obtained from the long-run equilibrium relationship.
Although the existence of a long-run relationship between OILP and y/N suggests that there must be Granger-
causality in at least one direction, it does not indicate the direction of temporal causality between the variables. The
direction of the causality in this case can only be determined by the F-statistic and the lagged error-correction term.
It should, however, be noted that even though the error-correction term has been incorporated in all the equations (3)
and (4), only equations where the null hypothesis of no cointegration is rejected will be estimated with an error-
correction term (see also Odhiambo, 2010).