\ifx\undefined\BySame
\newcommand{\BySame}{\leavevmode\rule[.5ex]{3em}{.5pt}\ }
\fi
\ifx\undefined\textsc
\newcommand{\textsc}[1]{{\sc #1}}
\newcommand{\emph}[1]{{\em #1\/}}
\let\tmpsmall\small
\renewcommand{\small}{\tmpsmall\sc}
\fi
\begin{thebibliography}{}

\harvarditem[Akerlof and Yellen]{Akerlof and
  Yellen}{1985}{akerlof&yellen:nearrational}
\textsc{Akerlof, George~A.,  {and} Janet~L. Yellen}  (1985): ``A Near-Rational
  Model of the Business Cycle, with Wage and Price Intertia,'' \emph{The
  Quarterly Journal of Economics}, 100(5), 823--38.

\harvarditem[An and Schorfheide]{An and Schorfheide}{2007}{as07}
\textsc{An, Sungbae,  {and} Frank Schorfheide}  (2007): ``Bayesian Analysis of
  DSGE Models,'' \emph{Econometric Reviews}, 2--4(26), 113--172.

\harvarditem[Bertaut]{Bertaut}{2002}{ber02}
\textsc{Bertaut, Carol}  (2002): ``Equity Prices, Household Wealth, and
  Consumption Growth in Foreign Industrial Countries: Wealth Effects in the
  1990s,'' International Finance Discussion Paper 724, Federal Reserve Board.

\harvarditem[Braun, Constantinides, and Ferson]{Braun, Constantinides, and
  Ferson}{1993}{bcf93}
\textsc{Braun, Philip~A., George~M. Constantinides,  {and} Wayne~E. Ferson}
  (1993): ``Time Nonseparability in Aggregate Consumption: International
  Evidence,'' \emph{European Economic Review}, 37, 897--920.

\harvarditem[{Bureau of Economic Analysis}]{{Bureau of Economic
  Analysis}}{2006}{bea06}
\textsc{{Bureau of Economic Analysis}}  (2006): ``Updated Summary NIPA
  Methodologies,'' {Survey of Current Business, November}, Bureau of Economic
  Analysis, available at {\small
  \url{http://www.bea.gov/scb/pdf/2006/11November/1106_nipa_method.pdf}}.

\harvarditem[Calvo]{Calvo}{1983}{calvo:prices}
\textsc{Calvo, Guillermo~A.}  (1983): ``Staggered Contracts in a
  Utility-Maximizing Framework,'' \emph{Journal of Monetary Economics}, 12,
  383--98.

\harvarditem[Campbell and Cochrane]{Campbell and Cochrane}{1999}{cc99}
\textsc{Campbell, John~Y.,  {and} John~H. Cochrane}  (1999): ``By Force of
  Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior,''
  \emph{Journal of Political Economy}, 107(2), 205--51.

\harvarditem[Campbell and Deaton]{Campbell and
  Deaton}{1989}{campbell&deaton:smooth}
\textsc{Campbell, John~Y.,  {and} Angus~S. Deaton}  (1989): ``Why Is
  Consumption So Smooth?,'' \emph{Review of Economic Studies}, 56, 357--74.

\harvarditem[Campbell and Mankiw]{Campbell and Mankiw}{1989}{cm89}
\textsc{Campbell, John~Y.,  {and} N.~Gregory Mankiw}  (1989): ``Consumption,
  Income and Interest Rates: Reinterpreting the Time Series Evidence,'' in
  \emph{NBER Macroeconomics Annual}, ed. by Olivier~J. Blanchard,  {and}
  Stanley Fischer, Cambridge, MA. MIT Press.

\harvarditem[Campbell and Mankiw]{Campbell and Mankiw}{1991}{cm91}
\textsc{\BySame{}}  (1991): ``The Response of Consumption to Income: A
  Cross-Country Investigation,'' \emph{European Economic Review}, 35(4),
  723--756.

\harvarditem[Carroll]{Carroll}{2003}{carroll:epidemicInflQJE}
\textsc{Carroll, Christopher~D.}  (2003): ``{M}acroeconomic {E}xpectations of
  {H}ouseholds and {P}rofessional {F}orecasters,'' \emph{Quarterly Journal of
  Economics}, 118(1), 269--298, Available at \\ {\small
  \url{http://econ.jhu.edu/people/ccarroll/epidemiologyQJE.pdf}}.

\harvarditem[Carroll, Fuhrer, and Wilcox]{Carroll, Fuhrer, and
  Wilcox}{1994}{cfw94}
\textsc{Carroll, Christopher~D., Jeffrey~C. Fuhrer,  {and} David~W. Wilcox}
  (1994): ``Does Consumer Sentiment Forecast Household Spending? If So, Why?,''
  \emph{American Economic Review}, 84(5), 1397--1408.

\harvarditem[Carroll, Overland, and Weil]{Carroll, Overland, and
  Weil}{2000}{cow00}
\textsc{Carroll, Christopher~D., Jody~R. Overland,  {and} David~N. Weil}
  (2000): ``Saving and Growth with Habit Formation,'' \emph{American Economic
  Review}, 90(3), 341--55.

\harvarditem[Carroll and Samwick]{Carroll and Samwick}{1997}{cs97}
\textsc{Carroll, Christopher~D.,  {and} Andrew~A. Samwick}  (1997): ``The
  Nature of Precautionary Wealth,'' \emph{Journal of Monetary Economics},
  40(1), 41--71.

\harvarditem[Carroll and Slacalek]{Carroll and Slacalek}{2006}{cs06}
\textsc{Carroll, Christopher~D.,  {and} Jirka Slacalek}  (2006): ``Sticky
  Expectations and Consumption Dynamics,'' mimeo, Johns Hopkins University.

\harvarditem[Catte, Girouard, Price, and Andre]{Catte, Girouard, Price, and
  Andre}{2004}{cgp04}
\textsc{Catte, Pietro, Nathalie Girouard, Robert Price,  {and} Christophe
  Andre}  (2004): ``Housing Markets, Wealth and the Business Cycle,'' OECD
  Economics Department Working Papers 394, OECD.

\harvarditem[Cochrane]{Cochrane}{1991}{cochrane:nearrational}
\textsc{Cochrane, John~H.}  (1991): ``The Sensitivity of Tests of the
  Intertemporal Allocation of Consumption to Near-Rational Alternatives,''
  \emph{American Economic Review}, 79, 319--37.

\harvarditem[Constantinides]{Constantinides}{1990}{con90}
\textsc{Constantinides, George~M.}  (1990): ``Habit Formation: A Resolution of
  the Equity Premium Puzzle,'' \emph{Journal of Political Economy}, 98(3),
  519--543.

\harvarditem[{Del Negro} and Schorfheide]{{Del Negro} and
  Schorfheide}{2004}{ds04}
\textsc{{Del Negro}, Marco,  {and} Frank Schorfheide}  (2004): ``Priors from
  General Equilibrium Models for VARs,'' \emph{International Economic Review},
  45(2), 643--673.

\harvarditem[Dynan]{Dynan}{2000}{dyn00}
\textsc{Dynan, Karen~E.}  (2000): ``Habit Formation in Consumer Preferences:
  Evidence from Panel Data,'' \emph{American Economic Review}, 90(3), 391--406.

\harvarditem[Ferson and Constantinides]{Ferson and Constantinides}{1991}{fc91}
\textsc{Ferson, Wayne~E.,  {and} George~M. Constantinides}  (1991): ``Habit
  Persistence and Durability in Aggregate Consumption: Empirical Tests,''
  \emph{Journal of Financial Economics}, 29(2), 199--240.

\harvarditem[Flavin]{Flavin}{1981}{fla81}
\textsc{Flavin, Marjorie~A.}  (1981): ``The Adjustment of Consumption to
  Changing Expectations About Future Income,'' \emph{Journal of Political
  Economy}, 89(5), 974--1009.

\harvarditem[Friedman]{Friedman}{1957}{friedman:atheory}
\textsc{Friedman, Milton~A.}  (1957): \emph{A Theory of the Consumption
  Function}. Princeton University Press.

\harvarditem[Fuchs-Sch{\"u}ndeln and Sch{\"u}ndeln]{Fuchs-Sch{\"u}ndeln and
  Sch{\"u}ndeln}{2005}{fss05}
\textsc{Fuchs-Sch{\"u}ndeln, Nicola,  {and} Matthias Sch{\"u}ndeln}  (2005):
  ``Precautionary Savings and Self-Selection: Evidence from the German
  Reunification {``}Experiment{''},'' \emph{Quarterly Journal of Economics},
  120(3), 1085--1120.

\harvarditem[Fuhrer]{Fuhrer}{2000}{fuh00}
\textsc{Fuhrer, Jeffrey~C.}  (2000): ``Habit Formation in Consumption and Its
  Implication for Monetary-Policy Models,'' \emph{American Economic Review},
  90(3), 367--390.

\harvarditem[Golinelli and Parigi]{Golinelli and Parigi}{2004}{gp04}
\textsc{Golinelli, Roberto,  {and} Giuseppe Parigi}  (2004): ``Consumer
  Sentiment and Economic Activity: A Cross Country Comparison,'' \emph{Journal
  of Business Cycle Measurement and Analysis}, 1(2), 147--170.

\harvarditem[Gourinchas and Parker]{Gourinchas and Parker}{2002}{gp02}
\textsc{Gourinchas, Pierre-Olivier,  {and} Jonathan Parker}  (2002):
  ``Consumption Over the Life Cycle,'' \emph{Econometrica}, 70(1), 47--89.

\harvarditem[Gruber]{Gruber}{2004}{gru04}
\textsc{Gruber, Joseph~W.}  (2004): ``A Present Value Test of Habits and the
  Current Account,'' \emph{Journal of Monetary Economics}, 51(7), 1495--1507.

\harvarditem[Hall]{Hall}{1978}{hal78}
\textsc{Hall, Robert~E.}  (1978): ``Stochastic Implications of the Life
  Cycle--Permanent Income Hypothesis,'' \emph{Journal of Political Economy},
  86(6), 971--987.

\harvarditem[Hall]{Hall}{1988}{hal88}
\textsc{\BySame{}}  (1988): ``Intertemporal Substitution in Consumption,''
  \emph{Journal of Political Economy}, 96(2), 339--357.

\harvarditem[{International Monetary Fund}]{{International Monetary
  Fund}}{2006}{imf06}
\textsc{{International Monetary Fund}}  (2006): ``Japan: Report on the
  Observance of Standards and Codes---Data Module, Response by the Authorities,
  and Detailed Assessments Using the Data Quality Assessment Framework
  (DQAF),'' IMF Country Report 06/115, International Monetary Fund, March.

\harvarditem[Ireland]{Ireland}{2004}{ire04}
\textsc{Ireland, Peter~N.}  (2004): ``A Method for Taking Models to the Data,''
  \emph{Journal of Economic Dynamics and Control}, 28, 1205--1226.

\harvarditem[Lettau and Ludvigson]{Lettau and Ludvigson}{2001}{ll01}
\textsc{Lettau, Martin,  {and} Sydney Ludvigson}  (2001): ``Consumption,
  Aggregate Wealth, and Expected Stock Returns,'' \emph{Journal of Finance},
  56(3), 815--849.

\harvarditem[Lettau and Ludvigson]{Lettau and Ludvigson}{2004}{ll04}
\textsc{\BySame{}}  (2004): ``Understanding Trend and Cycle in Asset Values:
  Reevaluating the Wealth Effect on Consumption,'' \emph{American Economic
  Review}, 94(1), 276--299.

\harvarditem[Ljungqvist and Uhlig]{Ljungqvist and Uhlig}{2000}{lu00}
\textsc{Ljungqvist, Lars,  {and} Harald Uhlig}  (2000): ``Tax Policy and
  Aggregate Demand Management under Catching Up with the Joneses,''
  \emph{American Economic Review}, 90(3), 356--366.

\harvarditem[Ludvigson and Michaelides]{Ludvigson and
  Michaelides}{2001}{ludvigson&michaelides:excesses}
\textsc{Ludvigson, Sydney,  {and} Alexander Michaelides}  (2001): ``Does Buffer
  Stock Saving Explain the Smoothness and Excess Sensitivity of Consumption?,''
  \emph{American Economic Review}, 91(3), 631--647.

\harvarditem[Mankiw]{Mankiw}{1982}{mankiw:durgoods}
\textsc{Mankiw, N.~Gregory}  (1982): ``Hall's Consumption Hypothesis and
  Durable Goods,'' \emph{Journal of Monetary Economics}, 10(3), 417--425.

\harvarditem[Muellbauer]{Muellbauer}{1988}{muellbauerAES88}
\textsc{Muellbauer, John}  (1988): ``Habits, Rationality and Myopia in the Life
  Cycle Consumption Function,'' \emph{Annales d'Economie et de Statistique}, 9,
  47--70.

\harvarditem[Okun]{Okun}{1981}{oku81}
\textsc{Okun, Arthur~M.}  (1981): \emph{Prices and Quantities: A Macroeconomic
  Analysis}. Brookings Institution Press.

\harvarditem[Pischke]{Pischke}{1995}{pischke:micromacro}
\textsc{Pischke, J{\"o}rn-Steffen}  (1995): ``Individual Income, Incomplete
  Information, and Aggregate Consumption,'' \emph{Econometrica}, 63(4),
  805--40.

\harvarditem[Reis]{Reis}{2006}{rei06}
\textsc{Reis, Ricardo}  (2006): ``Inattentive Consumers,'' \emph{Journal of
  Monetary Economics}, 53(8), 1761--1800.

\harvarditem[Shore and White]{Shore and White}{2006}{sw06}
\textsc{Shore, Stephen~H.,  {and} Joshua~S. White}  (2006): ``External Habit
  Formation and the Home Bias Puzzle,'' working paper, The Wharton School,
  University of Pennsylvania.

\harvarditem[Sims]{Sims}{2003}{sims:inattention}
\textsc{Sims, Christopher~A.}  (2003): ``Implications of Rational
  Inattention,'' \emph{Journal of Monetary Economics}, 50(3), 665--690,
  available at http://ideas.repec.org/a/eee/moneco/v50y2003i3p665-690.html.

\harvarditem[Smets and Wouters]{Smets and Wouters}{2003}{sw03}
\textsc{Smets, Frank,  {and} Raf Wouters}  (2003): ``An Estimated Dynamic
  Stochastic General Equilibrium Model of the Euro Area,'' \emph{Journal of
  European Economic Association}, 5(1), 1123--1175.

\harvarditem[Sommer]{Sommer}{2007}{som07}
\textsc{Sommer, Martin}  (2007): ``Habit Formation and Aggregate Consumption
  Dynamics,'' \emph{The B.E. Journal of Macroeconomics---Advances}, 7(1),
  Article 21.

\harvarditem[{Vissing-J\o rgensen}]{{Vissing-J\o rgensen}}{2002}{vis02}
\textsc{{Vissing-J\o rgensen}, Annette}  (2002): ``Limited Asset Market
  Participation and the Elasticity of Intertemporal Substitution,''
  \emph{Journal of Political Economy}, 110(825--53), 339--357.

\harvarditem[Wilcox]{Wilcox}{1992}{wil92}
\textsc{Wilcox, David~W.}  (1992): ``The Construction of the U.S. Consumption
  Data: Some Facts and Their Implications for Empirical Research,''
  \emph{American Economic Review}, 82(4), 922--941.

\harvarditem[Working]{Working}{1960}{wor60}
\textsc{Working, Holbrook}  (1960): ``Note on the Correlation of First
  Differences of Averages in a Random Chain,'' \emph{Econometrica}, 28(4),
  916--918.

\end{thebibliography}
