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RDP 2011-04: Assessing Some Models of the Impact of Financial Stress Upon Business Cycles
Equation
Pr
(
R
t
=
1
|
R
t
−
1
=
0
,
R
t
−
2
=
0
,
s
˜
t
)
=
1
−
(
1
−
E
(
∧
t
−
1
|
s
˜
t
)
)
=
E
{
1
(
Δ
y
t
<
0
,
Δ
2
y
t
+
1
<0
)
|
s
˜
t
}
=
E
{
1
(
Δ
y
t
<
0
)
1
(
Δ
2
y
t
+
1
<
0
)
|
s
˜
t
}
,
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