RDP 9608: Modelling the Australian Exchange Rate, Long Bond Yield and Inflationary Expectations
Equation (3)
Δ
r
t
=
α
r
t
−
1
+
β
{
π
¯
10
−
E
t
(
π
)
}
+
γ
0
Ret
C
a
p
t
−
1
+
σ
Δ
r
t
−
2
+
ϕ
Δ
Ret
C
a
p
t
−
1
+
λ
0
Δ
E
t
(
π
)
+
λ
2
Δ
E
t
−
2
(
π
)
+
θ
Δ
G
D
e
f
t
+
Σ
i
=
0
1
g
t
−
i
+
ε
t
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