Problem 1:
(a) Using examples explain the concept of cointegration.
(b) Explain the term ‘stationarity' and its importance.
(c) Differentiate between stochastic and deterministic trends?
Problem 2:
Write short notes on the following:
(a) Unit root tests
(b) 3 S's
(c) Spurious regression
(d) Dummy variable trap
(e) CLRM assumptions