RDP 2009-01: Currency Misalignments and Optimal Monetary Policy: A Re-examination
Equation (69)
Ψ
t
∝
ν
(
2
−
ν
)
σ
(
σ
−
1
)
4
D
(
y
˜
t
−
y
˜
t
*
)
2
−
(
σ
+
ϕ
2
)
(
(
y
˜
t
)
2
+
(
y
˜
t
*
)
2
)
−
(
ν
(
2
−
ν
)
4
D
)
Δ
t
2
−
ξ
2
δ
(
ν
2
(
π
H
t
)
2
+
2
−
ν
2
(
π
F
t
)
2
+
ν
2
(
π
F
t
*
)
2
+
2
−
ν
2
(
π
H
t
*
)
2
)
.
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