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RDP 2008-10: Solving Linear Rational Expectations Models with Predictable Structural Changes
Equation
H
=
Z
(
Λ
11
−
1
−
Λ
11
−
1
(
Λ
12
−
Φ
Λ
22
)
0
I
)
;
S
0
=
H
(
Q
1
−
Φ
Q
2
(
Λ
22
−
Ω
22
)
−
1
Q
2
)
C
;
S
1
=
H
(
Ω
11
Ω
12
−
Φ
Ω
12
0
0
)
Z
′
;
S
2
=
H
(
Q
1
−
Φ
Q
2
0
)
Ψ
;
and
S
y
=
−
H
(
0
I
m
)
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