Research Discussion Paper – RDP 9812 An Optimising Model for Monetary Policy Analysis: Can Habit Formation Help?



Vice President and Economist, Research Department, Federal Reserve Bank of Boston, Boston, MA, 02106; Visiting Economist, Economic Research Department, Reserve Bank of Australia, September 1998; e-mail: I thank Michael Klein, Richard Kopcke, Scott Schuh, and Geoff Tootell, and seminar participants at the Reserve Bank of Australia, Johns Hopkins University and Columbia University for their helpful comments, and Hoyt Bleakley for his excellent research assistance. The views expressed in this paper are the author's and do not necessarily reflect those of the Federal Reserve Bank of Boston, or the Reserve Bank of Australia. [*]