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RDP 8708: Risk Effects Versus Monetary Effects in the Determination of Short-Term Interest Rates
Equation (8)
log
b
t
(
1
)
−
log
b
t
*
(
1
)
=
α
(
log
b
t−1
(
1
)
−
log
b
t−1
*
(
1
)
)
+
1
δ
ε
t
+
η
t
.
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