RDP 2010-03: Modelling Inflation in Australia
Equation (A2)
θ
t
−
1
=
θ
t
(
W
t
P
t
Z
t
)
−
ϕ
[
Π
t
Π
t
−
1
α
(
Π
t
*
)
1
−
α
−
1
]
[
Π
t
Π
t
−
1
α
(
Π
t
*
)
1
−
α
]
+
β
ϕ
E
t
{
(
Λ
t
+
1
Λ
t
)
[
Π
t
+
1
Π
t
α
(
Π
t
+
1
*
)
1
−
α
−
1
]
[
Π
t
+
1
Π
t
α
(
Π
t
+
1
*
)
1
−
α
]
(
Y
t
+
1
Y
t
)
}
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