The study explores the behavior of the short run demands for assets and liabilities in the Brazilian industry during the 1990-1998 period based on portfolio theory. The implied set of demand equations is estimated for different sub-periods indicating that short-term demand patterns do not substantially differ when one compares the overall sample for 1990-98 and the sample pertaining a more stable period during 1994-98. Good support was found for explanatory factors referring to the stock of long term (nonchoice) items and variables approximating the activity level of the firm and the economy. The responsiveness of short-run assets and liabilities to relative returns (costs) of those items was weaker than previous studies for the U.K (Hay and Louri (1989, 1991, 1996)).
portfolio selection; industrial firms
