I have the following equation:
Rt= c + aRt-1 + vt (1)
where Rt are returns at time t, c is a constant, a is the parameter of returns at time t-1 and vt is an error term at time t.
I need to compute adjusted retruns at time t, that is R adjt, as follows
R adjt = vt /(1-a) (2)
Equation (1) must be estimated recursively. I do not really understand what I should do to estimate that equation recursively.