An Introduction to Macroeconomics with Household Heterogeneity

Dirk Krueger, University of Pennsylvania

December 16 – 20 , 2024

This is a course in quantitative macroeconomics with heterogeneous households. Its main thematic focus is on the interaction between inequality on the micro level and aggregate economic outcomes on the macro level. The course will have five modules. First, it will discuss the empirical motivation and household level data sets with the study of household heterogeneity in macroeconomics, and will review the complete markets-representative agent paradigm. The second module will study single household's intertemporal consumption and labor supply allocation decisions in partial equilibrium under various assumptions about the life horizon and labor income process of the household as well as the capital market structure. In the third module we will discuss the existence, uniqueness and computation of stationary general equilibria of the models analyzed in the second module, and apply it to evaluate the long-run consequences of fiscal policy reforms. The fourth module will be devoted to the analysis of aggregate shocks in the class of models from module 2 and 3, both completely unanticipated (so-called MIT) shocks as well as partially anticipated. Applications to recent crises (the financial crisis of 2007-2009 as well as the COVID-19 health crisis) will be presented. The course will conclude, in a fifth module, with an introduction to dynamic models with enforcement and private information frictions, including the evaluation of the empirical predictions of these classes of models for consumption and wealth inequality. 

Professor Dirk Krueger also holds a secondary appointment at Wharton’s Finance department and is a Fellow of the Econometric Society. He is the editor of the International Economic Review, a Research Associate at the National Bureau of Economic Research and Penn’s Population Studies Center, a Research Fellow at the Centre for Economic Policy Research, a Research Fellow at Netspar, and a Research Fellow at the Center for Financial Studies at Goethe University Frankfurt. His research has focused on whether, how and to what extent risk, a central concern in macroeconomics, is shared across households or groups of households. The main risks that affect typical households are labor income risks (e.g., due to becoming unemployed), health, disability and mortality risks. Since the economic impact of these risks is potentially large the welfare impact of sharing their economic consequences can be substantial. His research in this area, which is located in the field of macroeconomics but has strong links to other fields of economics, especially public finance and labor economics, combines economic theory with empirical and computational methods to answer research questions that are of immediate policy relevance.

 

Application

The application deadline ended on September 15, 2024.

Admission and Registration

The Study Center communicates admission decision by the end of October, 2024, and sends participants the corresponding invoice. The registration form will be sent after the Center receives the payment of the course fee.