Which is correct for 1st differencing: x(t) - x(t-1) = b(0) + (b1-1)x(t-1)+e(t) x(t)-x(t-1) = b(0) + b1(x(t-1)-x(t-2)) + e(t) Refer to question 9 and 10 on mock 1 and CFAI book P381…a little confusing.
x(t)-x(t-1) = b(0) + b1(x(t-1)-x(t-2)) + e(t) this one
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My understanding is the first one is used to correct unit root issue, and the second one is used to correct serial correlation…but both are considered first differencing.