RDP 9611: A Markov-Switching Model of Inflation in Australia
Equation (6)
π
t
=
c
(
S
t
)
+
(
1
−
γ
(
S
t
)
)
⋅
π
t
−
1
+
ω
(
S
t
)
⋅
Y
t
−
1
G
A
P
+
ε
(
S
t
)
ε
t
(
S
t
)
∼
N
(
0
,
σ
(
S
t
)
[
η
+
ϕ
⋅
ε
t
−
1
]
)
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