1. Time dependence of macro data
Distinguish between:
Stationary variables with a short time dependence, i.e.
a low degree of time persistence, transitory effcts
Nonstationary variables with long time dependence, i.e.
high degree of time persistence, permanent effects.

2. What is the long run?

4. A stochastic formulation
What is the meaning of a stochastic trend and
a stochastic long cycle?

5. Illustrative example of how to measure a stochastic trend

6. Measuring a stochastic trend

7. The stochastic trend in inflation

8. The increments of a deterministic trend are constant over time
The increments of a stochastic trend are random over time
First and second order stochastic trends

11. The I(2) Scenario Defining autonomous shocks Theoretically Empirically
Shocks shifting the AD curve
Shocks shifting the AS curve

12. Assuming price homogeneity

13. A theory consistent scenario
Inflation I(1) ?