data stationary

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scboy
Posts: 7
Joined: Fri Aug 02, 2019 1:18 am

data stationary

Postby scboy » Fri Aug 02, 2019 7:45 am

Hi all, i am new to eviews. and i am trying to detrend UK CPI data. it is the pvalue in adf test is smaller than 0.05 and reject the null there is a unit root at Level- trend and intercept test. but after I've generate detrend residual series. i can still see there's trend in residual series. how do i fully remove the trend?

scboy
Posts: 7
Joined: Fri Aug 02, 2019 1:18 am

Re: data stationary

Postby scboy » Fri Aug 02, 2019 9:44 am

the detrended residual series seems to have a trend.
Attachments
eviews cpi data.png
eviews cpi data.png (157.23 KiB) Viewed 8183 times

startz
Non-normality and collinearity are NOT problems!
Posts: 3798
Joined: Wed Sep 17, 2008 2:25 pm

Re: data stationary

Postby startz » Fri Aug 02, 2019 10:11 am

I'm not sure why you want to detrend the series, but you could try regressing on both a trend and a trend squared,.

scboy
Posts: 7
Joined: Fri Aug 02, 2019 1:18 am

Re: data stationary

Postby scboy » Fri Aug 02, 2019 4:03 pm

Thank you Startz. I am trying to remove the trend because the Cpi data has an upward slopping trend. correct me if i am wrong.....from what i learned in class that is non stationary data so we have to make to stationary before estimate equation?
Even i did trend and trend squared, residual series still doesn't look random.
Attachments
eviews_cpi.png
eviews_cpi.png (16.39 KiB) Viewed 8165 times

startz
Non-normality and collinearity are NOT problems!
Posts: 3798
Joined: Wed Sep 17, 2008 2:25 pm

Re: data stationary

Postby startz » Fri Aug 02, 2019 4:26 pm

If data has a unit root, then it can be problematic in a regression. Data which is trend stationary is not generally a problem. So you shouldn't need to detrend at all.

scboy
Posts: 7
Joined: Fri Aug 02, 2019 1:18 am

Re: data stationary

Postby scboy » Sat Aug 03, 2019 4:41 am

Startz, i know this is too much to ask, but could you take a look of my workfile and point out which log series i should detrend or do anything to make them stationary please?
Attachments
inflation forecast.wf1
(77.29 KiB) Downloaded 767 times


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