RDP 2009-01: Currency Misalignments and Optimal Monetary Policy: A Re-examination
Equation (B6)
υ
t
−
υ
t
max
=
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
)
+
(
1
−
σ
)
(
c
¯
t
c
˜
t
+
c
¯
t
*
c
˜
t
*
)
−
(
1
+
ϕ
)
(
n
¯
t
n
˜
t
+
n
¯
t
*
n
˜
t
*
)
+
o
(
‖
a
3
‖
)
.
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