Kathrin Schlafmann

Welcome to my home page!

I'm an Assistant Professor at the Copenhagen Business School (Department of Finance), a Research Affiliate of the Centre for Economic Policy Research (CEPR) and a Research Fellow of the Danish Finance Institute (DFI). I work in the area of Household Finance and Macroeconomics.

Contact Details

Copenhagen Business School

Department of Finance

Solbjerg Plads 3

2000 Frederiksberg




  • January '23: paper "Overpersistence Bias in Individual Income Expectations and its Aggregate Implications" accepted at AEJ:Macro!

  • December '22: paper "Designing Pension Plans According to Consumption-Savings Theory" is R&R at RFS!

  • December '22: new draft for "Expectations and Wealth Heterogeneity in the Macroeconomy"!

  • November '22: I have been awarded a Sapere Aude Starting Grant from the Independent Research Fund Denmark!

Research Interests

Household Finance, Macroeconomics, Real Estate

Working Papers

Designing Pension Plans According to Consumption-Savings Theory (with Ofer Setty and Roine Vestman), R&R at Review of Financial Studies, CEPR Discussion Paper 17489

We derive optimal characteristics of contribution rates into defined contribution pension plans based on consumption savings theory. Contribution rates should be age-dependent and adjust to the balance-to-income ratio. Using detailed registry data on household savings behavior in Sweden we show that individuals adjust savings rates according to these principles. We apply these principles in a quantitative model to design an optimal rule for contribution rates in a mandatory defined-contribution pension plan. Compared to typical rigid designs of contribution rates, our proposed design leads to the same average replacement rate and provides liquidity benefits and insurance against income shocks. The design implies a welfare gain of 1.8 percent in consumption equivalent and reduces the dispersion of replacement rates by more than 40 percent. Our design is robust to time-inconsistent investors.

Overpersistence Bias in Individual Income Expectations and its Aggregate Implications (with Filip Rozsypal), forthcoming in American Economic Journal: Macroeconomics, CEPR Discussion Paper 12028

Using micro level data, we document systematic forecast errors in household income expectations that are related to the level of income. We show that these errors can be formalized by a modest deviation from rational expectations, where agents overestimate the persistence of their income process. We then investigate the implications of these distortions on consumption and savings behavior and find two effects. First, these distortions allow an otherwise fully optimization-based quantitative model to match the joint distribution of liquid assets and income. Second, the bias alters the distribution of marginal propensities to consume which makes government stimulus policies less effective.

Expectations and Wealth Heterogeneity in the Macroeconomy (new draft December '22!) (with Tobias Broer, Alexandre Kohlhas, and Kurt Mitman), CEPR Discussion Paper 15934

We document systematic differences in macroeconomic expectations across U.S. households and rationalize our findings with a theory of information choice. We embed this theory into an incomplete-markets model with aggregate risk. Our model is quantitatively consistent with the pattern of expectation heterogeneity in the data. Relative to a full-information counterpart, our model implies substantially increased macroeconomic volatility and inequality. We show through the example of a wealth tax that neglecting the information channel leads to erroneous conclusions about the effects of macroeconomic policies. While in the model without information choice a wealth tax reduces wealth inequality, in our framework it reduces information acquired in the economy, leading to increased volatility and higher top-end wealth inequality in equilibrium.

Work in Progress

Lumpy Durable Purchases and Marginal Propensities to Consume (with Filip Rozsypal)


On the Possibility of Krusell-Smith Equilibria (with Tobias Broer, Alexandre Kohlhas, and Kurt Mitman), Journal of Economic Dynamics and Control, 141, August 2022, 104391.

Solutions to macroeconomic models with wealth inequality and aggregate shocks often rely on the assumption of limited but common information among households. We show that this assumption is inconsistent with rational information choice for plausible information costs. To do so, we embed information choice into the workhorse heterogeneous-agent model with aggregate risk (Krusell and Smith, 1998). First, we demonstrate that the benefits of acquiring more precise information about the state of the economy depend crucially on household wealth. Second, we show that such heterogeneous incentives to acquire information combine with the strategic substitutability of savings choices to imply that equilibria in which households acquire the same information do not exist for plausible information costs. Finally, we document that a representative-agent equilibrium may not exist even in the absence of exogenous sources of wealth heterogeneity.

Housing, Mortgages, and Self-Control, Review of Financial Studies, 34(5), May 2021, pp.2648–2687.

Using a quantitative theoretical framework this paper analyzes how problems of self-control influence housing and mortgage decisions. The results show that people with stronger problems of self-control are less likely to become homeowners, even though houses serve as commitment for saving. The paper then investigates the welfare effects of regulating mortgage products if people differ in their degree of self-control. Holding house prices fixed, higher down payment requirements and restrictions on refinancing turn out to be beneficial to people with sufficiently strong problems of self-control, even though these policies restrict access to the commitment device.

Rules of Thumb in Life-Cycle Saving Decisions (with Joachim Winter and Ralf Rodepeter), Economic Journal, 122, May 2012, pp.479–501 (Matlab code)

We analyse life-cycle saving decisions when households use simple heuristics, or rules of thumb, rather than solve the underlying intertemporal optimisation problem. We simulate life-cycle saving decisions using three simple rules and compute utility losses relative to the solution of the optimisation problem. Our simulations suggest that utility losses induced by following simple decision rules are relatively low. Moreover, the two main saving motives reflected by the canonical life-cycle model – long-run consumption smoothing and short-run insurance against income shocks – can be addressed quite well by saving rules that do not require computationally demanding tasks, such as backwards induction.

last updated: 11 January 2023