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RDP 8610: Equilibrium Exchange Rates and a Popular Model of International Asset Demands: An Inconsistency
Equation
π
0
≡
(
a
^
3
+
a
^
4
)
(
1
−
a
^
3
−
a
^
4
)
e
w
^
+
(
1
−
a
3
−
a
4
)
(
a
3
+
a
4
)
w
π
2
≡
−
(
1
−
a
^
3
−
a
^
4
)
a
^
4
e
w
^
−
(
a
3
+
a
4
)
a
2
w
π
^
2
≡
(
a
^
3
+
a
^
4
)
a
^
2
e
w
^
+
(
1
−
a
3
−
a
4
)
a
4
w
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