The easiest way to do this is to place your .bib file where TeX can find it, which is conveniently done using your local TeX tree. Some of the basics for finding the right location are discussed in Where do I place my own .sty files, to make them available to all my .tex files?, which focusses on .sty files. On my TeX Live installations, I use the locations:
- Windows
C:\Users\<user name>\texmf\bibtex\bib\local
- Mac OS X
~/Library/texmf/bibtex/bib/local
- Linux
~/texmf/bibtex/bib/local
With a recent TeX Live, you can simply place your .bib file in the appropriate place and it will be found, so you can use
\bibliography{myfile}
with no path at all. With an older TeX Live you may need to run texhash first. MiKTeX also allows the same local installation procedure.
The only minor issue with placing a .bib file in your local texmf tree is that it's not so convenient for editing as if it were in the Documents folder. I get around this by using a link, so I actually have my .bib file on my Mac in ~/Documents/Literature and link from there to ~/Library/texmf/bibtex/bib/local using the Unix ln command. On Windows 7 you can do a similar thing using the mklink (you need to have Admin rights to do this).
An alternative approach is to use the BIBINPUTS environmental variable to set a path to be searched for .bib files, again allowing you use the file name directly with no path. Setting environmental variables depends on the operating system you are using.