I'm really struggling understanding the model-fitting portion of these projects. For instance, on page 4 of this project, the student graphs an AR(1) model. I understand how the equation is developed, but don't see how it translates into the graph. If the first price (y0) of gold was 375, then Y(1) = 0.06344 * Y(0) + 6.588 = 29.3, which is clearly not what's on the graph.
I know I'm the problem, since all of the projects have similar graphs. What am I missing?
[NEAS: The AR(1) model is the first differences, not the gold prices themselves.]
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