RDP 9411: Demand Shocks, Inflation and the Business Cycle
Equation (7)
Δ
Y
t
−
Δ
Y
t
e
=
(
δ
−
δ
∗
)
+
γ
1
∗
(
Δ
D
t
−
Δ
D
t
e
)
+
γ
2
∗
(
Δ
C
t
−
Δ
C
t
e
)
+
(
γ
1
−
γ
1
*
)
Δ
D
t
+
(
γ
2
−
γ
2
∗
)
Δ
C
t
+
(
φ
t
−
φ
t
∗
)
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