RDP 2008-03: Monetary Transmission and the Yield Curve in a Small Open Economy
Equation
x
t
=
−
σ
α
−
1
(
R
1
,
t
−
E
t
π
h
,
t
+
1
)
−
σ
α
−
1
(
E
t
R
1
,
t
+
1
−
E
t
π
h
,
t
+
2
)
+
E
t
x
t
+
2
.
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