RDP 2009-01: Currency Misalignments and Optimal Monetary Policy: A Re-examination Equation (B6)

\begin{array}{l} υ_{t} - υ_{t}^{\max} = {\tilde{c}}_{t} + {\tilde{c}}_{t}^{*} - {\tilde{n}}_{t} - {\tilde{n}}_{t}^{*} + \frac{1 - σ}{2} ({\tilde{c}}_{t}^{2} + {\tilde{c}}_{t}^{* 2}) - \frac{1 + ϕ}{2} ({\tilde{n}}_{t}^{2} + {\tilde{n}}_{t}^{* 2}) \\ + (1 - σ) ({\bar{c}}_{t} {\tilde{c}}_{t} + {\bar{c}}_{t}^{*} {\tilde{c}}_{t}^{*}) - (1 + ϕ) ({\bar{n}}_{t} {\tilde{n}}_{t} + {\bar{n}}_{t}^{*} {\tilde{n}}_{t}^{*}) + o (‖ a^{3} ‖) . \end{array}