Question: Simulate the following AR(2) processes: Yt = 1 + 0.3Yt1 + 0.7Yt2 + t Yt = 1 0.3Yt1 0.7Yt2 + t for t

Simulate the following AR(2) processes:
Yt = 1 + 0.3Yt–1 + 0.7Yt–2 + εt
Yt = 1 – 0.3Yt–1 – 0.7Yt–2 + εt
for εt → N(0. 1). Comment up their differences: Contrast their time series and their autocorrelation functions. Comment on the covariance-stationary properties of both processes.

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