The Error Correction Model (ECM) is a statistical technique used in econometrics to analyze the short-term and long-term relationships between variables. It helps to understand how quickly a variable returns to equilibrium after a change, incorporating both levels and differences of the variables involved. ECM is particularly useful when dealing with non-stationary time series data, where traditional regression methods may fail. In an ECM, the long-term equilibrium relationship is represented by a cointegration equation, while the short-term dynamics are captured through adjustments to this equilibrium. This model is often applied in fields like finance and economics, where understanding the interplay between variables such as interest rates and inflation is crucial for effective decision-making.