You want to determine whether or not the unemployment rate for the United States has a stochastic trend using the Augmented Dickey Fuller Test (ADF). The BIC suggests using 3 lags, while the AIC suggests 4 lags. (a) Which of the two will you use for your choice of the optimal lag length? (b) After estimating the appropriate equation, the t-statistic on the lag level unemployment rate is 2.186 (using a constant, but not a trend). What is your decision regarding the stochastic trend of the unemployment rate series? (c) You repeat the same exercise in (b) using now the first difference in United States unemployment rates. Write down the appropriate equation to conduct the Augmented Dickey Fuller test here. The t- statistic on relevant coefficient turns out to be -4.791. What is your conclusion now? Are you surprised by this result? You want to determine whether or not the unemployment rate for the United States has a stochastic trend using the Augmented Dickey Fuller Test (ADF). The BIC suggests using 3 lags, while the AIC suggests 4 lags. (a) Which of the two will you use for your choice of the optimal lag length? (b) After estimating the appropriate equation, the t-statistic on the lag level unemployment rate is 2.186 (using a constant, but not a trend). What is your decision regarding the stochastic trend of the unemployment rate series? (c) You repeat the same exercise in (b) using now the first difference in United States unemployment rates. Write down the appropriate equation to conduct the Augmented Dickey Fuller test here. The t- statistic on relevant coefficient turns out to be -4.791. What is your conclusion now? Are you surprised by this result