By taking natural log transformation and successive differencing, one can convert the non stationary time series
into a stationary series.
Equation 1 contains no intercept and trend; this means that X is a stationary time series
with a zero mean if the null hypothesis is rejected.
1949), Extrapolation, Interpolation and Smoothing of Stationary Time Series, Chichester, Wiley.
1938), A Study in the Analysis of Stationary Time Series, 2nd edn, 1954, Almqvist and Wicksell.
While applying unit root tests, if structure breaks are not taken into account, it is possible that even a stationary time series
may show presence of unit root.
Shocks to a stationary time series
may be temporary.
In a previous article in this Journal (Haslag, Nieswiadomy, and Slottje, 1991), we provided evidence consistent with the notion that the net discount ratio is a stationary time series