Lubik, Thomas A. (contributor) - 2003 - [Elektronische Ressource]
variable and expected
inflation:
M
t
P
t
= χ
1
ε
C
σ
ε
t
·
1−β
µ
C
t
C
t+1
¶
σ
P
t
P
t+1
¸
−
1
ε
. (8)
7
The convenient … overbar).
The short and the long run are connected via the money demand-equation
(8), via expected inflation, and the Euler …, since inflation is expected to be constant after the initial
monetary expansion. We have:
M −
e
P =
σ
ε
e
C +
β
1−β
³
e
C −C …