RDP 8905: Monetary Policy Instruments: A Theoretical Analysis
Equation
p
t
=
1
(
β
+
αγ
+
αβγ
)
u
t
−
(
1
+
αγ
)
v
t
(
β
+
αγ
+
αβγ
)
−
(
λ
+
αγ
+
αγλ
)
(
1
−
αγ
+
αβγ
)
y
t
−
1
+
p
t
−
1
y
t
=
β
(
β
+
αγ
+
αβγ
)
u
t
+
αγ
(
β
+
αβγ
+
αγ
)
v
t
αγλ
+
αβλ
(
β
+
αγ
+
αβγ
)
y
t
−
1
.
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