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RDP 9803: Forward-Looking Behaviour and Credibility: Some Evidence and Implications for Policy
Equation (5a)
r
t
w
i
t
=
δ
1
[
Σ
i
=
0
n
(
r
∼
t
+
i
e
−
r
t
+
i
*
e
)
+
Σ
i
=
0
n
(
t
o
t
t
+
i
e
−
t
o
t
e
q
m
)
+
t
o
t
e
q
m
]
+
(
1
−
δ
1
)
[
t
o
t
t
−
1
+
0.35
(
r
t
∼
−
r
t
∗
)
+
0.30
(
r
∼
t
−
1
−
r
t
−
1
*
)
+
0.25
(
r
∼
t
−
2
−
r
t
−
2
*
)
+
0.10
(
r
∼
t
−
3
−
r
t
−
3
*
)
]
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