Galesi, Alessandro; Lombardi, Marco J. - European Central Bank - 2009
i
(L,p
i
)x
it
= a
i0
+ a
i1
t + Λ
i
(L,q
i
)x
∗
it
+ Ψ
i
(L,q
i
)d
t
+ u
it
, (1)
for i =0,1,...,N and t =1,...,T … of the deterministic time trend;
x
∗
it
is a set of foreign-specific variables and Λ
i
(L,q
i
)=
summationtext
q
i
i=0
Λ …
The set x
it
of country-specific variables includes: the core inflation (π
c
it
), calculated as the
annualized monthly …