This paper explores the issue of understanding time-varying relative risk aversion with household-level data. First, we derive an analytic form for a parsimonious portfolio choice model with the preference given by Greenwood, Hercowitz and Huffman (1988, GHH), and then, the analytical solution...

This paper studies the concavity of the consumption function of a habit-forming consumer with convex absolute risk tolerance. I show that the consumer's consumption function can be convex when young and becomes concave when old, contrary to the results of a standard consumptionsaving model with...

This paper contains the first cross-country comparison of the cyclical behaviour of real wages using microdata. After controlling for changes in labour quality, I find that real wages are strongly procyclical in Canada, the United Kingdom, and the United States. In contrast, the cyclicality of...