Answered: What is Break? how breaks play an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is Break? how breaks play an important role in macroeconomic data?

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Breaks - Breaks are the sudden change in property time series data .These changes can be change in means and any other different parameters .

Roles of Breaks in macroeconomics Data -

1. Shows the fundamental change in data - Breaks plays an important role to understand the time series data . When breaks found in data they indicate change in fundamental properties of data like (change in mean, standard deviation etc )

2. Indicate change in policy - Breaks usually indicate fundamental change in countries macroeconomic policy . Which can be devaluation of currency or even adopting new currency .

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