Consumption Growth and the Real Interest Rate following a Monetary Policy Shock: Is the Habit Persistence Assumption Relevant?

In this paper, we study the role of habit formation in accounting for the joint behavior of the real interest rate and consumption growth following a monetary policy shock. A VAR estimation on US data shows that following a contractionary monetary policy shock, the real interest rate exhibits a pers...

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Bibliographic details
Volume: 74
Main Author: Auray, Stéphane
Gallès, Clémentine
Format: Journal Article
Language: English
Place of publication: De Boeck Université 2008
published in: Recherches économiques de Louvain Vol. 74; no. 2; pp. 121 - 142
Data of publication: 2008
Series: Recherches économiques de Louvain
Subjects:
Online Access: available in Bonn?
Database: RePEc
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