Previous empirical evaluations of investment models have focused on the relative in-sample fit of various nonstructural models. The authors' evaluation extends this work along two dimensions. First, they augment the usual set of models with two Euler equations derived explicitly from dynamic...

The authors evaluate the ability of the composite index of leading indicators to predict business cycle turning points. Formal probability-assessment scoring rules are applied to turning-point probabilities generated from the leading index via a Bayesian sequential probability recursion. These...

Under common ARIMA representations of income, the permanent-income hypothesis predicts that the volatility of consumption should be larger than the volatility of unanticipated shocks to income; this prediction is not supported by the data. The authors examine whether this apparent excess...