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RDP 9101: The Effect of Steady Inflation on Interest Rates and the Real Exchange Rate in a World with Free Capital Flows
Equation (15)
∫
0
T
e
−
ε
t
ε
[
∫
0
t
(
r
T
+
π
)
e
−
(
r
∗
+
π
)
τ
dτ
+
e
−
πt
(
1
−
Δ
c
)
{
∫
t
T
(
r
T
+
π
)
e
−
r*τ
dτ
+
e
−
r*T
}
]
dt
+
e
−
εT
{
∫
0
T
(
r
T
+
π
)
e
−
(
r
∗
+
π
)
τ
dτ
+
e
−
(
r
∗
+
π
)
T
}
=
1.
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