RDP 2008-10: Solving Linear Rational Expectations Models with Predictable Structural Changes
Equation (21)
y
^
t
=
−
σ
−
1
(
r
t
−
E
t
π
t
+
1
)
+
E
t
y
^
t
+
1
+
(
1
−
ρ
a
)
σ
a
^
t
−
1
σ
ln
β
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