Many in the press and general public see consumer sentiment as a significant, independent force in the economy. Some suggest that sentiment indexes forecast future economic activity, others that changes in consumer sentiment actually drive business cycle fluctuations. ; This article shows that...

Widely accepted theories of consumer behavior suggest that consumers act according to a lifetime budget, spending against future earnings so long as they are predictable. Yet this study finds that many consumers respond to changes in income only when they are realized. Furthermore, adjustment...

A diverse group of economists and policymakers gathered in Woodstock, Vermont, in October 1999 to discuss the conduct of monetary policy in a low-inflation environment. The conference was held at a time when many countries had successfully reduced their inflation rates to the low single digits,...

In earlier work (Fuhrer 1997a), I document what I view as the failure of standard models of representative consumer and firm behaviour to replicate the dynamics that we observe in the aggregate data. In essence, these models fail because they imply that both inflation and real variables must...

Effective conduct of monetary policy requires accurate and timely indications of the current and future course of the ultimate targets of monetary policy. It is widely agreed that the monetary aggregates no longer provide reliable signals of inflation or of real activity. It is less widely...