Economics · Econometrics & Time Series Analysis
What is the key theoretical difference regarding stationarity between a white noise process and a random walk process in time series analysis?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1White noise processes are deterministic, while random walk processes are purely unpredictable.
- 2White noise has a non-constant variance over time, while a random walk has a constant variance.
- 3White noise exhibits infinite variance, while a random walk has zero variance.
- 4White noise is a stationary time series, while a random walk is non-stationary.✓
Correct answer
White noise is a stationary time series, while a random walk is non-stationary.
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