Question: Yt = B1 + B2X+ + ut where Ut = Piut-1 + put-2 + Et that is, the error term follows an AR(2) scheme and

Yt = B1 + B2X+ + ut where Ut = Piut-1 + put-2 + Et that is, the error term follows an AR(2) scheme and Et follows standard OLS assumptions. Outline the steps you would take to estimate the model taking into account the second-order autoregression. [Hint: You need to transform the model in such the way that the transform model has the error term eqauls to Et]

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