Evans, George W. (contributor); … - 2008
of the private sector is summarized by the two equations
x
t
= −ϕ(i
t
−E
∗
t
π
t+1
)+E
∗
t
x
t+1
+g
t
, (1)
which is the … supply curve.
Here x
t
and π
t
denote the output gap and inflation rate for period t,
respectively. i
t
is the nominal …
below. E
∗
t
x
t+1
and E
∗
t
π
t+1
denote private sector expectations of the output
gap and inflation next period. Since our …