Frontiers in Macroeconomics

Consumption and Household Debt

Lecturer: Dr. Winfried Koeniger (Queen Mary, University of London)
Date: July 25, 2011 – July 27, 2011 (IWH, Halle)
Venue: IWH Halle, Konferenzsaal, Kleine Märkerstraße 8, D-06108 Halle (Saale)
Registration: cgde@iwh-halle.de, registration deadline: July 17, 2011

Course Content

Monday:           10:30-13:00 and 14:00-17:30
Tuesday:           9:30-12:30 and 14:00-17:00
Wednesday:     9:30-12:30 and 14:00-17:00

The importance of understanding household consumption and debt for macroeconomic policy
is evident at least since the recent financial crisis. This course introduces PhD students to
recent research on household consumption, wealth and debt. The course will familiarise
participants with the main facts on household consumption which are then interpreted and
analysed with formal models. In doing so, numerical solution methods are discussed which
are essential to solve the models.‘

Course topics

1. Stylised facts and puzzles
2. The life-cycle model with exogenous market incompleteness
2.1. Liquidity constraints
2.2.  Precautionary savings
2.3. Computation of the equilibrium
3. Joint analysis of durable and non-durable consumption
3.1. The role of non-separable preferences
3.2. Adjustment costs
4. Household debt and bankruptcy
5. Models with endogenous market incompleteness

Prerequisites

Macroeconomics at the MSc level

Readings

[1] Davis, Morris: Macroeconomics, Cambridge University Press, 2009, chapter 3.
[2] Deaton, Angus: Understanding Consumption, Oxford University Press, 1992.
[3] Gollier, Christian: The Economics of Risk and Time, MIT Press, 2001

Material

Lecture 1
Lecture 2A
Lecture 2B
Lecture 3
Lecture 4
Long Syllabus
Lecture Material Limited Commitment