Hi everybody,

I am estimating a VECM to calculate an equilibrium exchange rate. For this, I use a total of seven variables (including the exchange rate).

When I use the vecrank command, STATA tells me there are six variables cointegrated.
Basically, my question is whether or not I should include the rank(6) option in the vec command. After all, I am only interested in explaining movements in the exchange rate, not in the other variables.

Can I proceed with my research if I just estimate the model with: vec exchangerate var1 var2 ... var6, trend(constant) rank(1)?

I do not understand the output if I specify rank(6).

Thank you in advance!

Hero