a) Sketch two separate time series on two different axes with the following features: i. The first time series should violate only one out of the three requirements for stationarity. ii. The second should violate at least two of the three requirements for stationarity. State each violation mathematically and explain it conceptually. Label your graphs appropriately and explain exactly how these violations are being depicted in your time series plots. b) Can you forecast either of these time series variables using the AR models you studied in this course? Explain in detail how you would do this and outline any limitations or drawbacks of this approach. c) Can you regress one of these time series variables on the other? What kind of results will you get if you do so? Give a well-thought-out answer based on everything you have learnt about this topic in this course.

a) Sketch two separate time series on two different axes with the following features: i. The first time series should violate only one out of the three requirements for stationarity. ii. The second should violate at least two of the three requirements for stationarity. State each violation mathematically and explain it conceptually. Label your graphs appropriately and explain exactly how these violations are being depicted in your time series plots. b) Can you forecast either of these time series variables using the AR models you studied in this course? Explain in detail how you would do this and outline any limitations or drawbacks of this approach. c) Can you regress one of these time series variables on the other? What kind of results will you get if you do so? Give a well-thought-out answer based on everything you have learnt about this topic in this course.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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