Answer: B Random walks

## Explanation **Random walks have a unit root**. **Key definitions:** - **Unit root**: When the autoregressive coefficient in an AR(1) model equals 1 - **Random walk**: \( x_t = x_{t-1} + \varepsilon_t \) where the coefficient on \( x_{t-1} \) is exactly 1 - **AR(0) models**: White noise processes with no autoregressive component - **Covariance-stationary AR(1) models**: Require \( |\phi| < 1 \) for stationarity **Analysis:** - **Option A (AR(0))**: No autoregressive component, so no unit root - **Option B (Random walks)**: By definition, have unit root (coefficient = 1) - **Option C (Covariance-stationary AR(1))**: By definition, \( |\phi| < 1 \), so no unit root Therefore, only random walks have a unit root.

Author: LeetQuiz Editorial Team