Kathrin Schlafmann

Welcome to my home page!

I'm an Assistant Professor at the Institute for International Economic Studies (IIES) in Stockholm, an Assistant Professor at the Copenhagen Business School (Department of Finance) and a Research Affiliate of the Centre for Economic Policy Research (CEPR). I work in the area of Household Finance and Macroeconomics, often touching on Behavioral Macro.

Contact Details

Institute for International Economic Studies
Stockholm University
SE-10691 Stockholm


curriculum vitae [pdf]

Research Interests

Household Finance, Macroeconomics, Real Estate, Behavioral Economics

Working Papers

Housing, Mortgages, and Self Control (October 2016)    
Revise & Resubmit Review of Financial Studies, CEPR Discussion Paper 11589

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 home owners, 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. Higher down payment requirements and restrictions on prepayment turn out to be beneficial to people with sufficiently strong problems of self control, even though these policies further restrict access to the commitment device.

Overpersistence Bias in Individual Income Expectations and its Aggregate Implications (with Filip Rozsypal, May 2017)
CEPR Discussion Paper 12028

We study the role of household income expectations for consumption decisions. Using micro level data, we first document an systematic, income-related component in household income forecast errors. These systematic errors can be explained by a modest deviation from rational expectations, where agents overestimate the persistence of their income process. We then study the implications of this bias in a quantitative model. Low income households who overestimate the persistence of their income are too pessimistic about their future income. This has two effects. First, these households are unwilling to borrow to smooth their consumption even though their borrowing constraint is not binding, thereby allowing the quantitative model to match the distribution of liquid assets across the income distribution. Second, they have lower marginal propensities to consume than their fully rational counterparts. Disregarding the bias in income expectations thus leads standard models to overpredict the effectiveness of government stimulus payments.


Rules of Thumb in Life-Cycle Saving Decisions (with Joachim Winter and Ralf Rodepeter), Economic Journal, 122, pp.479–501, May 2012 (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: 04 September 2017