An optimizing model for monetary policy analysis: can habit formation help?

Jeffrey C. Fuhrer ()

No 98-1, Working Papers from Federal Reserve Bank of Boston

Abstract: This paper discusses a rigorous empirical standard for monetary policy models. The motivation for this discussion is that, if one wishes to conduct welfare analysis , one must be reasonably confident that the model provides a good approximation to underlying consumer and firm behavior over the monetary policy horizon, i.e., in the short-run. The paper examines a specific alternative to the standard consumption model in which consumers' utility depends in part on current consumption relative to past consumption.

Keywords: Monetary policy; Consumption (Economics) (search for similar items in EconPapers)
Date: 1998
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Working Paper: An Optimising Model for Monetary Policy Analysis: Can Habit Formation Help? (1998)
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