Mean Reversion, What happens when b1>1?

If mean reversion only occurs when b1<1, and we would have a non-covariance stationary series when b1=1; and these are what we test for before going ahead and using a model for forecasting… What happens when we have b1>1?

I could tell you, but you’ll understand it far better if you model it in Excel and graph the results. If you put b0 in one cell and b1 in another, then you can simply change the values in those two cells to see how the result changes. Be sure to look at cases where b1 is negative as well as positive.

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