RDP 2018-05: Do Interest Rates Affect Business Investment? Evidence from Australian Company-level Data Equation (4)

k_{i, t} = {\tilde{α}}_{1} k_{i, t - 1} + {\tilde{α}}_{2} k_{i, t - 2} + {\tilde{β}}_{0} y_{i, t} + {\tilde{β}}_{1} y_{i, t - 1} + {\tilde{β}}_{2} y_{i, t - 2} + {\tilde{γ}}_{0} u c_{i, t} + {\tilde{γ}}_{1} u c_{i, t - 1} + {\tilde{γ}}_{2} u c_{i, t - 2} + τ_{t} + ω_{i} + ε_{i, t}