RDP 2006-05: Optimal Monetary Policy with Real-time Signal Extraction from the Bond Market
Equation (12)
L
t
=
E
t
[
∑
k
=
0
∞
β
k
[
λ
y
(
y
t
+
k
−
y
¯
t
+
k
)
2
+
π
t
+
k
2
+
λ
i
(
i
t
+
k
−
i
t
+
k
−
1
)
2
]
]
.
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