RDP 2011-02: Long-term Interest Rates, Risk Premia and Unconventional Monetary Policy Equation

Γ ˜ 0 , t + 1 y t + 1 = C ˜ t + 1 + Γ ˜ 1 , t + 1 y t + Ψ ˜ t + 1 ε t + 1 t + 1 Γ 0 , t + k y t + k = C t + k + Γ 1 , t + k y t + k − 1 + Π η t + k + Ψ t + k ε t + k 2 ≤ k ≤ T Γ ˜ 0 y t + k = C ¯ + Γ ¯ 1 y t + k − 1 + Π ¯ η t + k + Ψ ¯ ε t + k t ≥ T + 1. MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9 vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=x fr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaaeaaaaaaaaa8 qafaqaaeWacaaabaGafu4KdCKbaGaadaWgaaWcbaGaaGimaiaacYca caWG0bGaey4kaSIaaGymaaqabaGccaqG5bWaaSbaaSqaaiaadshacq GHRaWkcaaIXaaabeaakiabg2da9iqadoeagaacamaaBaaaleaacaWG 0bGaey4kaSIaaGymaaqabaGccqGHRaWkcuqHtoWrgaacamaaBaaale aacaaIXaGaaiilaiaadshacqGHRaWkcaaIXaaabeaakiaabMhadaWg aaWcbaGaamiDaaqabaGccqGHRaWkcuqHOoqwgaacamaaBaaaleaaca WG0bGaey4kaSIaaGymaaqabaGccqaH1oqzdaWgaaWcbaGaamiDaiab gUcaRiaaigdaaeqaaaGcbaGaamiDaiabgUcaRiaaigdaaeaacqqHto WrdaWgaaWcbaGaaGimaiaacYcacaWG0bGaey4kaSIaam4AaaqabaGc caqG5bWaaSbaaSqaaiaadshacqGHRaWkcaWGRbaabeaakiabg2da9i aadoeadaWgaaWcbaGaamiDaiabgUcaRiaadUgaaeqaaOGaey4kaSIa eu4KdC0aaSbaaSqaaiaaigdacaGGSaGaamiDaiabgUcaRiaadUgaae qaaOGaaeyEamaaBaaaleaacaWG0bGaey4kaSIaam4AaiabgkHiTiaa igdaaeqaaOGaey4kaSIaeuiOdaLaeq4TdG2aaSbaaSqaaiaadshacq GHRaWkcaWGRbaabeaakiabgUcaRiabfI6aznaaBaaaleaacaWG0bGa ey4kaSIaam4AaaqabaGccqaH1oqzdaWgaaWcbaGaamiDaiabgUcaRi aadUgaaeqaaaGcbaGaaGOmaiabgsMiJkaadUgacqGHKjYOcaWGubaa baGafu4KdCKbaGaadaWgaaWcbaGaaGimaaqabaGccaqG5bWaaSbaaS qaaiaadshacqGHRaWkcaWGRbaabeaakiabg2da9iqadoeagaqeaiab gUcaRiqbfo5ahzaaraWaaSbaaSqaaiaaigdaaeqaaOGaaeyEamaaBa aaleaacaWG0bGaey4kaSIaam4AaiabgkHiTiaaigdaaeqaaOGaey4k aSIafuiOdaLbaebacqaH3oaAdaWgaaWcbaGaamiDaiabgUcaRiaadU gaaeqaaOGaey4kaSIafuiQdKLbaebacqaH1oqzdaWgaaWcbaGaamiD aiabgUcaRiaadUgaaeqaaaGcbaGaamiDaiabgwMiZkaadsfacqGHRa WkcaaIXaGaaiOlaaaaaaa@B0E5@