Piger, Jeremy Max (contributor); … - 2006 - Rev.
the Nixon price controls in the early 1970s (a vector of supply shocks,
t
X ).
The distributed lag on inflation,
1 …
t
X , the infinite-horizon forecast of
inflation is equal to
t
z (see Beveridge and Nelson, 1981). Thus,
t
z has …, rewrite equation (3) as:
t
N
i it
it
itt
X
D
z εαπ +
⎥
⎦
⎤
⎢
⎣
⎡
+=
∑
= −
−
0
(5)
where
i
a is a vector of …