Assuming that the vector is called z and $n$ in your formula is the integer index of vector elements, use
x = Drop[z, 2] + 0.7 Drop[z, -2]
This adds the vector (sans the last two elements) to the vector times 0.7 with the first two elements removed (i.e. shifted by two elements to the left). Of course the result will be 2 elements shorter than the original. If this is not desired, you need to decide what $Z_0$ and $Z_{-1}$ should be and pad (PadLeft) z with these values.
This is likely the fastest possible solution in Mathematica.
EDIT
Another, also very fast possibility is
x = ListCorrelate[{0.7, 0, 1}, z]
ListCorrelate has settings for padding the arrays as well, if needed.