AR(1) Stationarity Condition

Problem

An AR(1) process x[t] = c + phi * x[t-1] + e[t] is stationary exactly when abs(phi) < 1. Return True when that condition holds and False otherwise.

This guarantees the effect of past shocks decays geometrically instead of accumulating.

Hint

The boundary abs(phi) = 1 is a random walk and is not stationary.

case 1

in: [0.5]

expected: true

case 2

in: [-0.9]

expected: true

case 3

in: [1]

expected: false

case 4

in: [1.2]

expected: false

case 5

in: [-1]

expected: false

Starter codePython

def is_stationary_ar1(phi):
    # Your code here
    pass

5 test cases · run your code against them in the editor