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(1) Consider the following difference equation: Y = Y - + & + 0.5&-1 a. Find the solution for y. You may find it useful
(1) Consider the following difference equation: Y = Y - + & + 0.5&-1 a. Find the solution for y. You may find it useful to iterate forward from yo, and assume that yo is known. Is yt stationary? Why or why not? b. Find the s-step-ahead forecast - Et Ytts- and explain what it means for the stability of yt. c. Finally, describe what specific steps you would take to transform yt into a stationary variable. (1) Consider the following difference equation: Y = Y - + & + 0.5&-1 a. Find the solution for y. You may find it useful to iterate forward from yo, and assume that yo is known. Is yt stationary? Why or why not? b. Find the s-step-ahead forecast - Et Ytts- and explain what it means for the stability of yt. c. Finally, describe what specific steps you would take to transform yt into a stationary variable
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