The elasticity of intertemporal substitution (EIS) is one of the key parameters in the Economics and Finance literature. It is usually estimated by means of the consumer’s Euler Equation using an instrumental variable approach, and the estimates are usually zero or close to zero. Nevertheless,...

Following Almeida, Campello and Weisbach (2003), we use the link between financial constraints and firm’s demand for liquidity to test the effect of financial constraints on firm policies in Brazil. The effect of financial constraints can be captured by a firm’s propensity to save cash out...

This paper tests the optimality of consumption decisions at the aggregate level taking into account popular deviations from the canonical constant-relative-risk-aversion (CRRA) utility function model-rule of thumb and habit. First, based on the critique in Carroll (2001) and Weber (2002) of the...