RDP 2009-01: Currency Misalignments and Optimal Monetary Policy: A Re-examination Equation (B5)

υ t = [ c ¯ t + c ¯ t * n ¯ t n ¯ t * + 1 σ 2 ( c ¯ t 2 + c ¯ t * 2 ) 1 + ϕ 2 ( n ¯ t 2 + n ¯ t * 2 ) ] + c ˜ t + c ˜ t * n ˜ t n ˜ t * + 1 σ 2 ( c ˜ t 2 + c ˜ t * 2 + 2 c ¯ t c ¯ t + 2 c ¯ t * c ˜ t * ) 1 + ϕ 2 ( n ˜ t 2 + n ˜ t * 2 + 2 n ¯ t n ˜ t + 2 n ¯ t * n ˜ t * ) + o ( a 3 ) MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9 vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=x fr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGceaqabeaacqaHfp qDdaWgaaWcbaGaamiDaaqabaGccqGH9aqpdaWadaqaaiqadogagaqe amaaBaaaleaacaWG0baabeaakiabgUcaRiqadogagaqeamaaDaaale aacaWG0baabaGaaiOkaaaakiabgkHiTiqad6gagaqeamaaBaaaleaa caWG0baabeaakiabgkHiTiqad6gagaqeamaaDaaaleaacaWG0baaba GaaiOkaaaakiabgUcaRmaalaaabaGaaGymaiabgkHiTiabeo8aZbqa aiaaikdaaaWaaeWaaeaaceWGJbGbaebadaqhaaWcbaGaamiDaaqaai aaikdaaaGccqGHRaWkceWGJbGbaebadaqhaaWcbaGaamiDaaqaaiaa cQcacaaIYaaaaaGccaGLOaGaayzkaaGaeyOeI0YaaSaaaeaacaaIXa Gaey4kaSIaeqy1dygabaGaaGOmaaaadaqadaqaaiqad6gagaqeamaa DaaaleaacaWG0baabaGaaGOmaaaakiabgUcaRiqad6gagaqeamaaDa aaleaacaWG0baabaGaaiOkaiaaikdaaaaakiaawIcacaGLPaaaaiaa wUfacaGLDbaaaeaacqGHRaWkceWGJbGbaGaadaWgaaWcbaGaamiDaa qabaGccqGHRaWkceWGJbGbaGaadaqhaaWcbaGaamiDaaqaaiaacQca aaGccqGHsislceWGUbGbaGaadaWgaaWcbaGaamiDaaqabaGccqGHsi slceWGUbGbaGaadaqhaaWcbaGaamiDaaqaaiaacQcaaaGccqGHRaWk daWcaaqaaiaaigdacqGHsislcqaHdpWCaeaacaaIYaaaamaabmaaba Gabm4yayaaiaWaa0baaSqaaiaadshaaeaacaaIYaaaaOGaey4kaSIa bm4yayaaiaWaa0baaSqaaiaadshaaeaacaGGQaGaaGOmaaaakiabgU caRiaaikdaceWGJbGbaebadaWgaaWcbaGaamiDaaqabaGcceWGJbGb aebadaWgaaWcbaGaamiDaaqabaGccqGHRaWkcaaIYaGabm4yayaara Waa0baaSqaaiaadshaaeaacaGGQaaaaOGabm4yayaaiaWaa0baaSqa aiaadshaaeaacaGGQaaaaaGccaGLOaGaayzkaaaabaGaeyOeI0YaaS aaaeaacaaIXaGaey4kaSIaeqy1dygabaGaaGOmaaaadaqadaqaaiqa d6gagaacamaaDaaaleaacaWG0baabaGaaGOmaaaakiabgUcaRiqad6 gagaacamaaDaaaleaacaWG0baabaGaaiOkaiaaikdaaaGccqGHRaWk caaIYaGabmOBayaaraWaaSbaaSqaaiaadshaaeqaaOGabmOBayaaia WaaSbaaSqaaiaadshaaeqaaOGaey4kaSIaaGOmaiqad6gagaqeamaa DaaaleaacaWG0baabaGaaiOkaaaakiqad6gagaacamaaDaaaleaaca WG0baabaGaaiOkaaaaaOGaayjkaiaawMcaaiabgUcaRiaad+gadaqa daqaamaafmaabaGaamyyamaaCaaaleqabaGaaG4maaaaaOGaayzcSl aawQa7aaGaayjkaiaawMcaaaaaaa@B1D9@