Consider the simple regression model t = 1,2,..., T where u̟₁ = pu̟-1 + & with |p] < 1 and E(&) = 0, E (ɛ²) = o², E(&&s) = 0,t ‡ s a. What are the consequences of having first order autoregressive autocorrelation? b. Derive the mean of autocorrelated u,'s. Y₁ = B₁ + B₁x₂ + Ur

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A: p=Xn=31200=0.155C.I=99%=0.99α=1−C.I=1−0.99=0.01

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