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Ben
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To facilitate our analysis, we will use the following $(n-1) \times n$ matrices:

$$\mathbf{M}_0 \equiv \begin{bmatrix} 1 & 0 & 0 & \cdots & 0 & 0 \\ 0 & 1 & 0 & \cdots & 0 & 0 \\ 0 & 0 & 1 & \cdots & 0 & 0 \\ \vdots & \vdots & \vdots & \ddots & \vdots & \vdots \\ 0 & 0 & 0 & \cdots & 1 & 0 \\ \end{bmatrix} \quad \quad \quad \mathbf{M}_1 \equiv \begin{bmatrix} 0 & 1 & 0 & \cdots & 0 & 0 \\ 0 & 0 & 1 & \cdots & 0 & 0 \\ 0 & 0 & 0 & \cdots & 0 & 0 \\ \vdots & \vdots & \vdots & \ddots & \vdots & \vdots \\ 0 & 0 & 0 & \cdots & 0 & 1 \\ \end{bmatrix},$$

and the following $n \times n$ matrices:

$$\begin{align} \mathbf{G}_0 &\equiv \mathbf{M}_0^\text{T} \mathbf{M}_1 = \begin{bmatrix} 0 & 1 & 0 & \cdots & 0 & 0 \\ 0 & 0 & 1 & \cdots & 0 & 0 \\ 0 & 0 & 0 & \cdots & 0 & 0 \\ \vdots & \vdots & \vdots & \ddots & \vdots & \vdots \\ 0 & 0 & 0 & \cdots & 0 & 1 \\ 0 & 0 & 0 & \cdots & 0 & 0 \\ \end{bmatrix} \\[20pt] \mathbf{G}_1 &\equiv \mathbf{M}_0^\text{T} \mathbf{M}_0 = \begin{bmatrix} 1 & 0 & 0 & \cdots & 0 & 0 \\ 0 & 1 & 0 & \cdots & 0 & 0 \\ 0 & 0 & 1 & \cdots & 0 & 0 \\ \vdots & \vdots & \vdots & \ddots & \vdots & \vdots \\ 0 & 0 & 0 & \cdots & 1 & 0 \\ 0 & 0 & 0 & \cdots & 0 & 0 \\ \end{bmatrix}. \end{align}$$

Given the observable time-series vector $\mathbf{u} = (u_1,...,u_n)$ we can then write the model in matrix form as:

$$\mathbf{M}_1 \mathbf{u} = \rho \mathbf{M}_0 \mathbf{u} + \sigma \boldsymbol{\varepsilon} \quad \quad \quad \quad \quad \boldsymbol{\varepsilon} \sim \text{N}(\mathbf{0}, \mathbf{I}).$$

The OLS estimator for the parameter $\rho$ is:

$$\begin{align} \hat{\rho}_\text{OLS} &= (\mathbf{u}^\text{T} \mathbf{M}_0^\text{T} \mathbf{M}_0 \mathbf{u} )^{-1} (\mathbf{u}^\text{T} \mathbf{M}_0^\text{T} \mathbf{M}_1 \mathbf{u} ) \\[12pt] &= (\mathbf{u}^\text{T} \mathbf{G}_1 \mathbf{u} )^{-1} (\mathbf{u}^\text{T} \mathbf{G}_0 \mathbf{u} ) \\[12pt] &= \frac{\mathbf{u}^\text{T} \mathbf{G}_0 \mathbf{u}}{\mathbf{u}^\text{T} \mathbf{G}_1 \mathbf{u}} \\[12pt] &= \frac{\sum_{i=1}^{n-1} u_i u_{i+1}}{\sum_{i=1}^{n-1} u_i^2 }. \end{align}$$

Ben
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