Beyer, Andreas; Farmer, Roger E. A.; Henry, Jérôme; … - 2005
by the work of Galí and Gertler (GG 1999),
π
t
= α
0
+ α
1
π
e
t+1
+ α
2
x
t
+ α
3
π
t−1
+ e
t
, (1)
where π
t
is the GDP … deflator, π
e
t+1
is the forecast of π
t+1
made in period
t, x
t
is a real forcing variable (e.g. marginal costs as suggested … variables (i.e, with π
e
t+1
and x
t
). Sincewewanttoarrive
at the specification of a system of forward looking equations, we …