Describe, Using Equations, How You Would Implement a Dickey-Fuller and an Augmented

question 20

Essay

Describe, using equations, how you would implement a Dickey-Fuller and an augmented Dickey-Fuller test in order to test for a unit root.

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Definitions:

Time Series

Time Series refers to a sequence of data points collected or recorded at successive times, often at regular intervals.

Exponential Smoothing

A time series forecasting method for univariate data that applies decreasing weights over time.

Liquor Sales

The revenue generated from the sale of alcoholic beverages.

Smoothing Constant

A parameter in exponential smoothing models that controls the degree to which more recent observations are weighted more heavily than older observations.