In the first chapter, I analyze the question that whether the elasticity ofintertemporal substitution or risk aversion is more important determinant of precautionarysavings. This is an important question since a significant fraction of the capitalaccumulation is due to precautionary savings...

In this dissertation, I explore the impact of idiosyncratic risk on asset returns. The first essay examines how idiosyncratic risk affects the cross-section of stock returns. I use an exponential GARCH model to forecast expected idiosyncratic volatility and employ a combination of the size...