Question: 15.1 Consider the AR(1) model Yt = b0 + b1Yt - 1 + ut. Suppose the process is stationary. a. Show that E1Yt2 = E1Yt

15.1 Consider the AR(1) model Yt = b0 + b1Yt - 1 + ut. Suppose the process is stationary.

a. Show that E1Yt2 = E1Yt - 12. (Hint: Read Key Concept 15.3.)

b. Show that E1Yt2 = b0 > 11 - b12.

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