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?
Step by Step Answer:
Principles Of Econometrics
ISBN: 9781118452271
5th Edition
Authors: R Carter Hill, William E Griffiths, Guay C Lim