RDP 9101: The Effect of Steady Inflation on Interest Rates and the Real Exchange Rate in a World with Free Capital Flows
Equation (A1)
[
D
l
Dc
]
=
1
Σ
[
φ
γ
φ
λ
δ
1
−
τ
φ
γ
1
−
τ
δ
(
λ
φ
(
1
−
τ
)
−
k
)
1
−
τ
]
[
l
c
]
+
1
Σ
[
φ
γ
λ
λ
−
k
γ
τ
1
−
τ
0
−
Σ
]
[
μ
r
*
]
,
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