RDP 2007-06: The Butterfly Effect of Small Open Economies Equation (3)

r_{t}^{*} = ρ_{r}^{*} r_{t - 1}^{*} + α_{π}^{*} π_{t}^{*} + α_{x}^{*} x_{t}^{*} + ε_{r, t}^{*}