What is stationarity and why is it desired to run models?
What is stationarity and why is it desired to run models?
Homework Answers
Stationarity can be defined in many ways..
As one is - a Time series is said to be stationary if it contains no trend terms, no seasonality terms and no cyclic variation ie it contains only random term..
As the question of desiration, it is desired that for fitting any model the series should contain random terms only.
So it is necessary firstly we remove trend seasonal and cyclical terms and left it with only random term so that we can fit it in a model.
1. Which test is used for the following a. omission of relevant variables b. parameter stability...
1. Which test is used for the following a. omission of relevant variables b. parameter stability 2. when can we introduce dummies in models? 3. What is stationarity and Why is it desired to run a model? 4. how do you determine the order of Lags in ARMA model? 5. List and explain the Box - Jenkins model adequacy test for the ARMA/ARIMA
15. What does it mean for a time series to be non-stationarity, and what are the...
15. What does it mean for a time series to be non-stationarity, and what are the problems associated with regressing non-stationary variables on each other? How do we test whether a time series has a unit root?
Discounted Cash Flow models use a hurdle rate, or the desired rate of return, to compute...
Discounted Cash Flow models use a hurdle rate, or the desired rate of return, to compute the present value of future cash flows. Briefly describe how management might determine the hurdle rate for an investment opportunity.
Market-clearing models are developed to analyze macroeconomic issues a. In the long run and in the...
Market-clearing models are developed to analyze macroeconomic issues a. In the long run and in the short run b. In the long run and in the short run c. Neither in the long run nor in the short run d. Neither in the long run nor in the short run
What is the purpose of an economic model? Why do economists make assumptions in developing models?
What is the purpose of an economic model? Why do economists make assumptions in developing models?
George Box once said "all models are wrong, some are useful." Discuss why all models are...
George Box once said "all models are wrong, some are useful." Discuss why all models are wrong, explain what he means by useful, and identify what tools are out there to gauge model accuracy.
What has changed in the industry when moving from the short run to the long run? Explain why.
What has changed in the industry when moving from the short run to
the long run? Explain why.
Why have multi-attribute attitude models become so popular among marketing researchers? What three elements are specified...
Why have multi-attribute attitude models become so popular among marketing researchers? What three elements are specified in such models?
4. What are deductibles? Why are they so important in US health insurance models? How do...
4. What are deductibles? Why are they so important in US health insurance models? How do changes in deductibles impact utilization and clinical decision-making.
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
15. What does it mean for a time series to be non-stationarity, and what are the problems associated with regressing non-stationary variables on each other? How do we test whether a time series has a unit root?
What has changed in the industry when moving from the short run to
the long run? Explain why.
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
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