RDP 2008-07: A Medium-Scale Open Economy Model of Australia Equation (B1)

\begin{array}{l} {\hat{π}}_{t}^{s} - {\hat{\bar{π}}}_{t}^{c} = \frac{β}{1 + κ_{s}} [E_{t} π_{t + 1}^{s} - ρ_{π} {\hat{\bar{π}}}_{t}^{c}] + \frac{κ_{s}}{1 + κ_{s} β} [π_{t - 1}^{s} - ρ_{π} {\hat{\bar{π}}}_{t - 1}^{c}] - \dots \\ \frac{κ_{s} β (1 - ρ_{π})}{1 + κ_{s} β} {\hat{\bar{π}}}_{t}^{c} + \frac{(1 - ξ_{s}) (1 - β ξ_{s})}{ξ_{s} (1 + κ_{s} β)} ({\hat{m c}}_{t}^{s} + {\hat{λ}}_{t}^{s}) \end{array}