RDP 9807: Inflation Targeting in a Small Open Economy
Equation (2B)
π
t
N
=
λ
π
t
−
1
N
+
(
1
−
λ
)
t
π
t
+
1
N
+
α
y
t
−
1
+
β
1
Δ
e
t
−
1
+
β
2
Δ
e
t
−
2
+
ε
t
N
,
λ
∈
[
0
,
1
]
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