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RDP 2008-10: Solving Linear Rational Expectations Models with Predictable Structural Changes
Equation
w
2
,
t
=
(
Λ
22
−
Ω
22
)
−
1
Q
2
C
−
∑
j
=
1
∞
(
Ω
22
−
1
Λ
22
)
j
−
1
Ω
22
−
1
Q
2
(
Ψ
ε
t
+
j
+
Π
η
t
+
j
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=
(
Λ
22
−
Ω
22
)
−
1
Q
2
C
−
E
t
∑
j
=
1
∞
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Ω
22
−
1
Λ
22
)
j
−
1
Ω
22
−
1
Q
2
Ψ
ε
t
+
j
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