lakis wrote:Guys...think I am getting crazy..Thats what I found in a published paper:
"Nonlinear least-squares estimates of the following equation: i=(1-ρ)(β+γ*p(t)+δ*y(t))+ρi(t-1)
where i is the Federal Funds Rate, p is forecasted inflation, and y is the output gap. "
First of all, the above model is linear or non-linear???? if its non-linear how do we estimate it in Eviews??
The model can be equally well fit as a linear model. The intercept will be (1-ρ)β, the coefficient on p will be (1-ρ)γ etc.