There are many ways to generalise the O-U model. What is done in this paper? The abstract does not give sufficient information for a guess.
Article Modelling real interest rates
The generalized O-U permits negative real interest rates, which may be upbrought by the stochastic nature of real rate generation.
The paper you mention describes everything. Do you have this paper?
Hope this is of assistance!
The Ornstein-Uhlenbeck process already "permits negative rates", it's equivalent to the Vasicek model.
I don't have the paper, only the abstract. That's why I ask which kind of "generalization" they are using, as the abstract does not make it clear.
Okay, so the answer is that this is a single-factor Ornstein-Uhlenbeck process with additive noise and where the mean-reversion level is a deterministic exponential, which is a function that gets along well with the structure of the O-U process.
@Sergei: I had been scouring the iterature for "generalised mean-reversion" and most were multi-factor models. This one is just "reversion to a moving target" but with a single noise factor. But I couldn't see it just from the abstract.
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