Using your knowledge on time series, explain the following concepts: (a) Stationary and non-stationary times series (b) The concept of a spurious regression. Give an example c) Explain how the test for stationarity is conducted d) What is the implication of having a non-stationary time series? What are some of the remedies to such data sets? e) Given the following equation Yt = Yt −1 + ut, conduct a first difference transformation f) When is the augmented Dickey Fuller test used?

Using your knowledge on time series, explain the following concepts: (a) Stationary and non-stationary times series (b) The concept of a spurious regression. Give an example c) Explain how the test for stationarity is conducted d) What is the implication of having a non-stationary time series? What are some of the remedies to such data sets? e) Given the following equation Yt = Yt −1 + ut, conduct a first difference transformation f) When is the augmented Dickey Fuller test used?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 1E

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