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Home » Finance Faqs » What is the meaning of a process having more than one unit root?

What is the meaning of a process having more than one unit root?

In case of a difference stationary process, the no. of times the differencing operation is carried out to achieve stationarity is called the integration order of the process. It is also said that the process has d unit roots.

We donote a differencing operation of d times on a process yt by Δdyt

A stationary process does nto require differencing and so is I(0).
A random walk is an I(1) and hence has 1 unit root.
An I(2) process has 2 unit roots and for this process Δdyt will be stationary



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