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

a t = ρ a t 1 + ε a t a t = ρ a t 1 + ε a t μ t = ρ μ t 1 + ε μ t μ t = ρ μ t 1 + ε μ t MathType@MTEF@5@5@+=feaagCart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=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@7549@