RDP 2013-11: Issues in Estimating New-Keynesian Phillips Curves in the Presence of Unknown Structural Change
Equation
π
t
+
1
=
b
1
π
t
+
b
2
x
t
+
b
3
(
λ
1
r
t
−
1
+
λ
2
x
t
+
λ
3
π
t
+
ε
3
t
)
+
ξ
t
+
1
=
d
1
π
t
+
d
2
x
t
+
d
3
r
t
−
1
+
ζ
t
+
1
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