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2 A time series (t) ten, is stationary in the mean if E (x+) = = , a constant, for all t = N. Consider

2 A time series (t) ten, is stationary in the mean if E (x+) = = , a constant, for all t = N. Consider the following model xt = (t)st + Eti where E (t) = 0 and where {st} is a cyclic component with st = St12. (i) Show that applying the seasonal difference operator V12 does not make this model stationary in the mean. (ii) What additional difference operator would you apply in order to make the model stationary in the mean? (iii) Justify your answer in detail

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