RDP 9108: Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials? Equation (1)

q t =α ( k R t k R t * )+ q ¯ t , α= 1 1 θ k >1. MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9 vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=x fr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqbaeaabeGaaa qaaiaabghadaWgaaWcbaGaaeiDaaqabaGccqGH9aqpcqaHXoqycaGG OaWaaSbaaSqaaiaabUgaaeqaaOGaaeOuamaaBaaaleaacaqG0baabe aakiabgkHiTmaaBaaaleaacaqGRbaabeaakiaabkfadaqhaaWcbaGa aeiDaaqaaiaabQcaaaGccaGGPaGaey4kaSIabiyCayaaraWaaSbaaS qaaiaabshaaeqaaOGaaiilaaqaaiabeg7aHjabg2da9maalaaabaGa aGymaaqaaiaaigdacqGHsislcqaH4oqCdaahaaWcbeqaaiaabUgaaa aaaOGaeyOpa4JaaGymaiaac6caaaaaaa@523C@