RDP 2008-03: Monetary Transmission and the Yield Curve in a Small Open Economy Equation

x t = − σ α − 1 ( R 1 , t − E t π h , t + 1 ) − σ α − 1 ( E t R 1 , t + 1 − E t π h , t + 2 ) + E t x t + 2 . MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9 vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=x fr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaamiEamaaBa aaleaacaWG0baabeaakiabg2da9iabgkHiTiabeo8aZnaaDaaaleaa cqaHXoqyaeaacqGHsislcaaIXaaaaOWaaeWaaeaacaWGsbWaaSbaaS qaaiaaigdacaGGSaGaamiDaaqabaGccqGHsislcaWGfbWaaSbaaSqa aiaadshaaeqaaOGaeqiWda3aaSbaaSqaaiaadIgacaGGSaGaamiDai abgUcaRiaaigdaaeqaaaGccaGLOaGaayzkaaGaeyOeI0Iaeq4Wdm3a a0baaSqaaiabeg7aHbqaaiabgkHiTiaaigdaaaGcdaqadaqaaiaadw eadaWgaaWcbaGaamiDaaqabaGccaWGsbWaaSbaaSqaaiaaigdacaGG SaGaamiDaiabgUcaRiaaigdaaeqaaOGaeyOeI0IaamyramaaBaaale aacaWG0baabeaakiabec8aWnaaBaaaleaacaWGObGaaiilaiaadsha cqGHRaWkcaaIYaaabeaaaOGaayjkaiaawMcaaiabgUcaRiaadweada WgaaWcbaGaamiDaaqabaGccaWG4bWaaSbaaSqaaiaadshacqGHRaWk caaIYaaabeaakiaac6caaaa@6C7E@