You are an economist working for the Central Bank of Econville. The bank has collectedquarterly data on the country's Gross Domestic Product (GDP) and inflation rate for the past20 years. Your task is to analyze this data to understand the economic trends and providepolicy recommendations. Using the Eviews software to conduct your econometric analysis,you performed an Augmented Dickey-Fuller (ADF) test on the GDP and inflation data tocheck for stationarity and the results show that the p-value is greater than the chosensignificance level 0.05%. Assuming that both series are stationary, you estimated a simplelinear regression model with GDP as the dependent variable and inflation as the independentvariable. Explain the concept of stationarity in a time series context.
You are an economist working for the Central Bank of Econville. The bank has collected
quarterly data on the country's
20 years. Your task is to analyze this data to understand the economic trends and provide
policy recommendations. Using the Eviews software to conduct your econometric analysis,
you performed an Augmented Dickey-Fuller (ADF) test on the GDP and inflation data to
check for stationarity and the results show that the p-value is greater than the chosen
significance level 0.05%. Assuming that both series are stationary, you estimated a simple
linear regression model with GDP as the dependent variable and inflation as the independent
variable. Explain the concept of stationarity in a time series context.
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