We conduct empirical tests of a simplified version of the ratio habit model developed in Abel(1990), in which habit is extended beyond the preceding period. We show that change in four-year consumption growth---the measure of consumption resulting from our ratio habit preference---explains the...

The increase in the equity risk premium during the 2007–2009 Great Recession and the aging of the baby boomers in the United States have led analysts and financial industry experts to believe that risk aversion among stock investors has moved to a more-permanently higher range. If so, stocks...

This study is to assess the dynamics effects of business confidence and consumer confidence on stock market risk premiums and to determine the relative importance of business confidence and consumer confidence in forecasting the variability of stock market risk premiums though a variance...