RDP 2007-10: Trade Costs and Some Puzzles in International Macroeconomics
Equation (5)
I
i
t
Y
i
t
=
δ
1
i
+
ϕ
1
S
i
t
Y
i
t
+
γ
1
S
i
t
Y
i
t
f
i
t
+
θ
1
f
i
t
+
ϖ
1
K
i
t
+
ϖ
2
K
i
t
f
i
t
+
ϖ
3
K
i
t
f
i
t
S
i
t
Y
i
t
+
ϖ
4
K
i
t
S
i
t
Y
i
t
+
e
1
i
t
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