Making the Case for a Low Intertemporal Elasticity of Substitution

R. Anton Braun and Tomoyuki Nakajima. Working Paper 2012-1 (January. The responsiveness of consumption growth to changes in expected interest rates plays a central role in dynamic decision making. The authors provide some new evidence that this elasticity is small.

http://www.frbatlanta.org/pubs/wp/12_01.cfm