- 35

- 0

xt + 1/6xt-1 – 1/3xt-2 = εt + 0.7εt-1

Inorder to know if a model is stationary. we check the mean, variance and the covariance and check whether it is dependent on time.

Obviously the mean is zero but my problem is how do i carry out the variance can i combine AR and MA together or do i do it separately?

and another problem is what does E[(xt-1)^2] gives me? I know E [(εt)^2] gives σ^2.

Thx