RDP 2007-10: Trade Costs and Some Puzzles in International Macroeconomics
Equation (3)
R
E
R
i
t
=
δ
3
+
ϕ
3
R
E
R
i
t
−
1
+
γ
3
R
E
R
i
t
−
1
f
i
t
+
θ
3
f
i
t
+
e
3
i
t
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