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3. Consider the following non-stationary process: 3t = 7o+y₁t+24. with uput-1+ and ei.i.d. ². Indicate (with explanation) the source(s) of non-stationarity of y. Show that you can rewrite the model as: Ayt = Bo+B₁t+ B₂3t-1 + Et. Clearly indicate the one-to-one relation between (Yo. 71, P) and (Bo.B1, B₂). What name do we give the non-stationary process yt when p= 1? Briefly indicate how to test whether this is the case.

3. Consider the following non-stationary process: 3t = 7o+y₁t+24. with uput-1+ and ei.i.d. ². Indicate (with explanation) the source(s) of non-stationarity of y. Show that you can rewrite the model as: Ayt = Bo+B₁t+ B₂3t-1 + Et. Clearly indicate the one-to-one relation between (Yo. 71, P) and (Bo.B1, B₂). What name do we give the non-stationary process yt when p= 1? Briefly indicate how to test whether this is the case.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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3. Consider the following non-stationary process: Yt = Yo + Yit + u4, with u = p4-1+et and e, i.i.d. o, o2. Indicate (with explanation) the source(s) of non-stationarity of ye. Show that you can rewrite the model as: Ayt = Bo + Bit + B2yt-1 + Et. Clearly indicate the one-to-one relation between (70, Y1, P) and (Bo,B,B2). What name do 1? Briefly indicate how to test whether this we give the non-stationary process yt when p is the case. %3D
Transcribed Image Text:3. Consider the following non-stationary process: Yt = Yo + Yit + u4, with u = p4-1+et and e, i.i.d. o, o2. Indicate (with explanation) the source(s) of non-stationarity of ye. Show that you can rewrite the model as: Ayt = Bo + Bit + B2yt-1 + Et. Clearly indicate the one-to-one relation between (70, Y1, P) and (Bo,B,B2). What name do 1? Briefly indicate how to test whether this we give the non-stationary process yt when p is the case. %3D
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