RDP 9608: Modelling the Australian Exchange Rate, Long Bond Yield and Inflationary Expectations
Equation (7)
Δ
i
t
=
α
i
t
−
1
+
β
[
E
P
F
t
(
π
t
+
4
)
]
t
−
1
+
γ
0
R
e
t
C
a
p
t
−
1
+
γ
1
r
t
−
1
*
+
Σ
i
=
0
2
θ
0
i
Δ
r
t
−
i
+
θ
1
Δ
[
E
P
F
t
(
π
t
+
4
)
]
−
1
+
θ
2
g
t
−
3
+
ε
t
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