Ar(1) vs Y_t-1

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marcounam
Posts: 49
Joined: Tue Jan 11, 2011 10:42 am

Ar(1) vs Y_t-1

Postby marcounam » Tue Aug 02, 2011 7:58 am

Hello:

What are the advantages of assuming that the residuals follow an ar(1) process instead of the original series on a model? I have constructed models with an ar(1) term but the correlogram still blows up. what can i do?

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