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RDP 9108: Australia's Real Exchange Rate – Is it Explained by the Terms of Trade or by Real Interest Differentials?
Equation (2)
q
t
=
α
(
k
R
t
−
k
R
t
*
)
+
q
¯
t
+
u
t
,
where
q
¯
t
=
γ
+
β
TOT
t
.
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