RDP2013-08: International Business Cycles with Complete Markets
Equation
Λ
1
(
s
t
)
=
Λ
2
(
s
t
)
,
Λ
j
(
s
t
)
=
β
E
t
[
Λ
j
(
s
t
)
R
j
(
s
t
)
]
,
Λ
j
(
s
t
)
=
(
c
j
(
s
t
)
−
b
h
j
(
s
t
−
1
)
−
χ
n
j
(
s
t
)
t
−
η
t
−
η
)
−
σ
−
b
β
E
t
[
(
c
j
(
s
t
+
1
)
−
b
h
j
(
s
t
)
−
χ
n
j
(
s
t
+
1
)
t
−
η
t
−
η
)
−
σ
]
,
Λ
j
(
s
t
)
χ
n
j
(
s
t
)
η
(
c
j
(
s
t
)
−
b
h
j
(
s
t
−
1
)
−
χ
n
j
(
s
t
)
t
+
η
t
−
η
)
−
σ
=
1
(
1
−
α
)
z
j
(
s
t
)
k
j
(
s
t
−
1
)
α
n
j
(
s
t
)
−
α
,
R
t
+
1
=
a
1
(
i
j
(
s
t
)
k
j
(
s
t
−
1
)
)
−
1
/
ξ
×
[
α
y
j
(
s
t
+
1
)
k
j
(
s
t
)
+
(
i
j
(
s
t
+
1
)
k
j
(
s
t
)
)
1
/
ξ
(
1
−
δ
+
a
2
a
1
+
1
ξ
−
1
(
i
j
(
s
t
+
1
)
k
j
(
s
t
)
)
1
−
1
/
ξ
)
]
,
c
1
(
s
t
)
+
c
2
(
s
t
)
+
i
1
(
s
t
)
+
i
2
(
s
t
)
=
y
1
(
s
t
)
+
y
2
(
s
t
)
.
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