The data file nasa contains annual data on sunspots and the rate of growth in real GDP

Question:

The data file nasa contains annual data on sunspots and the rate of growth in real GDP in the U.S. for the period 1950-2014. Jevons, a 19th century economist, suggested that there might be a relationship between business cycles and sunspots because variations in sunspots indicate variations in weather which in turn causes variation in agricultural output.

a. Plot each of the series. Do business cycles tend to follow sunspot activity?

b. Using a \(5 \%\) significance level, test whether each series is stationary.

c. Set up an ARDL model to test the hypothesis that sunspots can be used to predict business cycles in the U.S. Do your results support Jevons' theory?

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Related Book For  book-img-for-question

Principles Of Econometrics

ISBN: 9781118452271

5th Edition

Authors: R Carter Hill, William E Griffiths, Guay C Lim

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