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

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter13: Measuring The Economy's Performance

Section: Chapter Questions

Problem 18AA

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Question

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

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.

Expert Solution

Step 1

Answer -

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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