Household Finance: Theory and Applications

Undergraduate / Graduate

This course will examine the choices households make about important financial decisions and how these individual choices can impact the aggregate economy. Each week, basic predictions from economic theory will be discussed and compared with empirical findings. Topics will include: asset market participation and household portfolio choice; human capital and student loans; housing and mortgages; retirement planning; credit card debt; payday loans; and the gig/sharing economy. Focus will also be placed on government policies affecting these topics, including so-called household financial engineering, the creation of Government Sponsored Enterprises (GSEs) like "Fannie" and "Freddie," and regulatory agencies like the Consumer Financial Protection Bureau (CFPB). The course will provide an introduction to structural modeling for conducting policy counterfactuals. Assessment will be based on problem sets, a midterm and a final. These problem sets will require students to work in R, Stata or other statistical package of the student's choice (with permission of instructor).