Question: AR(2) processes with negative i 's can generate oscillations with longer periods than AR(1) [e.g. try 1 = 1, y0 = 1]. Demonstrate this by

AR(2) processes with negative i 's can generate oscillations with longer periods than AR(1) [e.g. try 1 = 1, y0 = 1]. Demonstrate this by computing AR(2) with (1, 2) = (0.7, 0.7) and t = 0, i.e., yt = 0.7yt1 0.7yt2. Use y0 = 0, y1 = 1 as initial conditions. Generate y2, y3, y4, and report the y values of the first 4 extrema (local maxima and local minima as shown in the graph below.) as a vector (e.g. [1, 2, 3, 4]) in the order they occur. Plotting the y you obtained may help you identify the extrema.

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