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Suppose the rate of ination in year t, It, is to be modelled by the AR(1) It 0.0182 = 0.42(1t_1 0.0182) + 0.0422,: where Zt~N[0,1]
Suppose the rate of ination in year t, It, is to be modelled by the AR(1) It 0.0182 = 0.42(1t_1 0.0182) + 0.0422,: where Zt~N[0,1] The current (period 0) annual rate of ination is 5.3% (I0 = 0.053). b) Find the distribution of I1. Provide the necessary calculation
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