Habit Formation in Consumption and Its Implications for Monetary Policy Models

By Jeffrey C. Fuhrer. 2000

1,274 citations recorded by the source corpus.

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In Economics and Econometrics

Citations in the corpus

Estimated General Equilibrium Models for the Evaluation of Monetary Policy in the Us and Europe (2005, background): “(22) where W o t is the nominal wage set in period t by optimising wage-setters who are able to reset their wage in that period.”
Is Inflation Persistence Intrinsic in Industrial Economies? (2003, neutral): “An alternative approach assumes that high inflation persistence results from the structure of nominal contracts; cf. Buiter and Jewitt (1989), Fuhrer and Moore (1995), Fuhrer (2000) , Calvo et al. (2001), Christiano et al. (2001).”
The Role of Search Frictions and Bargaining for Inflation Dynamics (2006, background): “Hence, from (13) the condition for the (12)The use of this discount factor effectively evaluates profits in terms of the values attached to them by the households, who ultimately own firms.”
Comparing Shocks and Frictions in Us and Euro Area Business Cycles: A Bayesian DSGE Approach (2004, neutral): “The habit parameter (0.59 for the euro area and 0.69 for the US) is estimated to be relatively on the low side compared to, for example, the estimates provided in Fuhrer (2000).”
Speed Limit Policies: The Output Gap and Optimal Monetary Policy (2003, positive): “22 xt = θxt−1 + (1− θ)Etxt+1 − σ(Rt − Etπt+1) + µt (21) where µt = ut − ȳt + θȳt−1 + (1− θ)Etȳt+1 Equation (21) can be motivated by the presence of habit formation in consumption (Fuhrer 2000).”
Appendix: Monetary Policy Drivers of Bond and Equity Risks (2020, positive): “Clarida, Richard, Jordi Gali, and Mark Gertler, 1999, “The Science of Monetary Policy: A New Keynesian Perspective”, Journal of Economic Literature 37, 1661–1707.”
Expectations-Based Reference-Dependent Life-Cycle Consumption (2017, background): “By providing a purely preference-based explanation for the consumption puzzles, I resume a literature pioneered by Fuhrer (2000) and Michaelides (2002), who assume internal multiplicative habit formation.”
The policy preferences of the US Federal Reserve (2004, neutral): “Q1 it seems implausible to assume that the federal funds rate was the policy instrument (Fuhrer, 2000).”
THE REAL-INTEREST-RATE GAP AS AN INFLATION INDICATOR (2003, positive): “We assume h > 0 in light of evidence that this reduces some empirical weaknesses of DSGE models [Fuhrer (2000), Boldrin et al. (2001)].11 We augment the utility function with a disturbance (λt ) to consumption preferences, which we interpret as an “IS” or “real demand” shock.”
Term structure evidence on interest rate smoothing and monetary policy inertia (2002, background): “(18), is simply a convenient econometric approximation.”
Natural rate measures in an estimated DSGE model of the U.S. economy (2008, positive): “For non-durables and services excluding housing, the habit parameter is about 0.8, close to the value in found by Fuhrer (2000) .”
A MACRO-FINANCE MODEL OF THE TERM STRUCTURE, MONETARY POLICY AND THE ECONOMY* (2003, neutral): “The estimated parameters describing the output dynamics also fall within reasonable ranges.(21) Specifically, the estimated value of μy = .”