RDP 2013-10: Stochastic Terms of Trade Volatility in Small Open Economies Equation (D2)

σ q , t = ( 1 − ρ σ ) σ q + ρ σ σ q , t − 1 + α ( | u t − 1 / σ q , t − 1 | − E | u t − 1 / σ q , t − 1 | ) + β ( u q , t − 1 / σ q , t − 1 ) MathType@MTEF@5@5@+=feaagCart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGceaqabeaacqaHdpWCdaWgaaWcbaGaamyCaiaacYcacaWG0baabeaaiiaakiab=1da9maabmaabaGaaGymaiabgkHiTiabeg8aYnaaBaaaleaacqaHdpWCaeqaaaGccaGLOaGaayzkaaGaeq4Wdm3aaSbaaSqaaiaadghaaeqaaOGaey4kaSIaeqyWdi3aaSbaaSqaaiabeo8aZbqabaGccqaHdpWCdaWgaaWcbaGaamyCaiaacYcacaWG0bGaeyOeI0IaaGymaaqabaaakeaacqGHRaWkcqaHXoqydaqadaqaaiaacYhacaWG1bWaaSbaaSqaaiaadshacqGHsislcaaIXaaabeaakiab=9caViabeo8aZnaaBaaaleaacaWGXbGaaiilaiaadshacqGHsislcaaIXaaabeaakiaacYhacqGHsislcaWGfbGaaiiFaiaadwhadaWgaaWcbaGaamiDaiabgkHiTiaaigdaaeqaaOGae83la8Iaeq4Wdm3aaSbaaSqaaiaadghacaGGSaGaamiDaiabgkHiTiaaigdaaeqaaOGaaiiFaaGaayjkaiaawMcaaiabgUcaRiabek7aInaabmaabaGaamyDamaaBaaaleaacaWGXbGaaiilaiaadshacqGHsislcaaIXaaabeaakiab=9caViabeo8aZnaaBaaaleaacaWGXbGaaiilaiaadshacqGHsislcaaIXaaabeaaaOGaayjkaiaawMcaaaaaaa@809F@