RDP 2008-10: Solving Linear Rational Expectations Models with Predictable Structural Changes
Equation (17)
Γ
˜
0
,
1
y
1
=
C
˜
1
+
Γ
˜
1
,
1
y
0
+
Ψ
˜
1
ε
1
t
=
1
Γ
0
,
t
y
t
=
C
t
+
Γ
1
,
t
y
t
−
1
+
Π
η
t
+
Ψ
t
(
ε
t
u
+
ε
t
a
)
2
≤
t
≤
T
Γ
˜
0
y
t
=
C
¯
+
Γ
¯
1
y
t
−
1
+
Π
¯
η
t
+
Ψ
¯
ε
t
t
≥
T
+
1
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