Answered: What is Break? how breaks play an…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Macroeconomic Policy, Economic Stability, And The Federal Debt

Section: Chapter Questions

Problem 4CQ

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What is Break? how breaks play an important role in macroeconomic data?

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Breaks - Breaks are the sudden change in property time series data .These changes can be change in means and any other different parameters .

Roles of Breaks in macroeconomics Data -

1. Shows the fundamental change in data - Breaks plays an important role to understand the time series data . When breaks found in data they indicate change in fundamental properties of data like (change in mean, standard deviation etc )

2. Indicate change in policy - Breaks usually indicate fundamental change in countries macroeconomic policy . Which can be devaluation of currency or even adopting new currency .

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