The purpose of this paper is to test for the presence of habit formation in consumption decisions using household panel data. We apply the test proposed by <link rid="b27">Meghir and Weber (1996)</link> to a Spanish panel data set in which households are observed for up to eight consecutive quarters. This temporal...

This article examines the role of money in a small-scale dynamic general equilibrium model of the euro zone estimated by maximum likelihood. The model allows for both intertemporal and intratemporal non-separability in preferences. We find, first, that real balances do not affect the marginal...

The inflation targeting regime prevailing in the UK is not the result of a change in policy maker objectives. Analysis of UK policymakers' statements demonstrates that objectives have been essentially unchanged over five decades. Instead, the crucial underpinning of UK inflation targeting is an...

The UK's monetary policy strategy is one of floating exchange rates and inflation forecast targeting, with the targeted measure referring to consumer prices. We consider whether it is welfare-reducing to target inflation in the CPI rather than in a narrower index and the role of the exchange...