Beck, Günter W. (contributor); Hubrich, Kirstin (contributor) - 2006
681
October 2006
country j at period t
x
ijt
= λ
ij
f
t
+η
ij
g
jt
+e
ijt
, (4)
i = 1,...,N
j
, j = 1,...,6 t = 1,...,T …,
In the factor specification we define x
ijt
as the (standardized) inflation rate in region i of
where f
t
are the area … factors
by q
t
and their lags by q
t−1
, the model
x
ijt
= α
ij
q
t
+β
ij
q
t−1
+η
ij
g
jt
+e
ijt
, (5)
is equivalent to
x
ijt …