RDP 8610: Equilibrium Exchange Rates and a Popular Model of International Asset Demands: An Inconsistency
Equation (18b)
d
w
^
=
w
^
[
r
^
+
a
^
(
r
+
μ
e
+
σ
e
2
−
σ
1
e
−
r
^
)
−
c
^
/
w
^
]
d
t
+
w
^
[
σ
^
1
d
z
^
1
−
a
^
(
σ
e
d
z
e
−
σ
1
d
z
1
+
σ
^
1
d
z
^
1
)
]
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