RDP 2008-03: Monetary Transmission and the Yield Curve in a Small Open Economy
Equation (8)
x
t
=
E
t
x
t
+
1
−
σ
α
−
1
(
R
1
,
t
−
E
t
π
h
,
t
+
1
)
+
ϕ
3
E
t
Δ
y
t
+
1
*
+
σ
−
1
(
1
−
ρ
g
)
(
1
−
ϕ
2
)
g
t
+
σ
−
1
(
1
−
ρ
g
*
)
ϕ
3
g
t
*
−
ϕ
4
(
1
−
ρ
a
)
a
t
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