Levin, Andrew T. (contributor); … - 2003 - [Elektronische Ressource]
the habit stock, denoted by qt, and the
ex ante real long-term bond rate, Rt. The innovation to consumption is modeled as … an AR(1)
process. Non-consumption output is determined by its two own lags, the ex ante real bond rate
(equation 10), and …-consumption output. The ex ante real bond rate is determined by
the expectations theory of the term structure (equation 17).
Of course …