RDP 2008-03: Monetary Transmission and the Yield Curve in a Small Open Economy
Equation (1)
x
t
*
=
E
t
x
t
+
1
*
−
σ
−
1
(
R
1
,
t
*
−
E
t
π
t
+
1
*
)
−
ϕ
1
(
1
−
ρ
a
*
)
a
t
*
+
σ
−
1
(
1
−
ρ
g
*
)
g
t
*
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