Question: For the time series that you have generated in Exercise 10.6, implement the augmented Dickey-Fuller tests for unit root. Explain your choices and your results.

For the time series that you have generated in Exercise 10.6, implement the augmented Dickey-Fuller tests for unit root. Explain your choices and your results. For the updated data set in Exercise 10.5, test for unit root. What do you find? Can you reject the unit root? Comment on your findings and explain your preferences on the deterministic trend versus the stochastic trend in this data set.

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In Tables 4 and 5 we present the results of the Augmented DickeyFuller unit root test on series 1 and series 2 in Exercise 6 Because we have simulated the data the choice of case I II or III Table 105 ... View full answer

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