Y = Bo + Bit+ with me defined as a simple random walk n = 11-1 +e (e is a stationary white noise process). Show that this model can be written as y =B1 + 9-1+ 3. The stochastic trend model (random walk with drift) is given by M = Be + Bit + with defined as a simple random walk 11 = 11 +6. The deterministic trend model is given by - Bo+811+ where ez is a stationary white noise process. Explain the difference between these two types of trend model. Will they give similar forecasts? Why? Which one will generate forecasts with more volatility? 1.3 Stationarity When a variable y is stationary we require that the mean and variance are constant (do not Y = Bo + Bit+ with me defined as a simple random walk n = 11-1 +e (e is a stationary white noise process). Show that this model can be written as y =B1 + 9-1+ 3. The stochastic trend model (random walk with drift) is given by M = Be + Bit + with defined as a simple random walk 11 = 11 +6. The deterministic trend model is given by - Bo+811+ where ez is a stationary white noise process. Explain the difference between these two types of trend model. Will they give similar forecasts? Why? Which one will generate forecasts with more volatility? 1.3 Stationarity When a variable y is stationary we require that the mean and variance are constant (do not