We strongly reject the full-insurance hypothesis, using testing variables that are not decision variables for the households under investigation. We find that households are not insured against changes in the unemployment rate associated with the household heads occupational category. Using this...

This article analyzes the predictability of asset returns that are discounted using a consumption-based discount factor. The main objective of the analysis is to investigate how ancillary statistical assumptions affect the performance of this model. It is shown that, unlike tests of...