Does this time series appear to be stationary

Reference no: EM131444606

Question: 1. Look at the plot of the logarithm of GDP for Japan in given Figure. Does this time series appear to be stationary? Explain. Suppose that you calculated the first difference of this series. Would it appear to be stationary? Explain.

2. Many financial economists believe that the random walk model is a good description of the logarithm of stock prices. It implies that the percentage changes in stock prices are unforecastable. A financial analyst claims to have a new model that makes better predictions than the random walk model. Explain how you would examine the analyst claim that his model is superior.

Reference no: EM131444606

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