1. 

   Polina Hadjipanayiotou Member

   Hello everyone and Happy New Year.
   Could some explain to me briefly the "strictly speaking" part of question 13.19 on page 35? I didn't understand how the process X_t+1 was re-written in terms of differences.
   
   Thanks in advance Polina.

    

   Polina Hadjipanayiotou, Jan 3, 2018

   #1
2. 

   John Lee ActEd Tutor Staff Member

   \(X_{t+1} = 1.3X_t - 0.3X_{t-1} + e^X_{t+1} - 0.65e^X_t + 0.35e^Y_t\)
   \(X_{t+1} - X_t = 0.3X_t - 0.3X_{t-1} + e^X_{t+1} - 0.65e^X_t + 0.35e^Y_t\)
   \(\bigtriangledown X_{t+1} = 0.3\bigtriangledown X_t + e^X_{t+1} - 0.65e^X_t + 0.35e^Y_t\)

    

   Last edited: Jan 23, 2018

   John Lee, Jan 23, 2018

   #2

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