Daniel Jonas Schmidt

This paper studies the effect of flexible retirement on the marginal propensity to consume out of a windfall gain. Using data from the Survey of Consumer Expectations, I find that the MPC of workers is about 20% lower than the MPC of retirees, even when controlling for age and other individual characteristics. In a simple theoretical model, I demonstrate that endogenous retirement can explain this difference in MPCs: Older workers use a part of the windfall to finance early retirement which decreases their consumption response compared to retirees. To quantify this mechanism, I build a life-cycle model with a realistic social security system and durable goods. I find that flexible retirement can account for most of the MPC difference in the data. My results have important implications for the response of aggregate consumption to stock market booms and for the use of MPCs as sufficient statistics in public finance.

This paper analyzes the effects of property transfer taxes on homeownership, residential mobility, and welfare. Using an overlapping generations model calibrated to the Netherlands, I find that an abolition of the 2% transfer tax increases the likelihood that homeowners sell their old house and buy a new one by about 40%. It also leads to a rise of the homeownership rate by 1-5 percentage points (depending on how revenue neutrality is achieved). Newborns prefer to live in an economy without property transfer taxes if the forgone tax revenues are replaced with higher annual property taxes, but not if revenue neutrality is achieved with higher income taxes. I also consider a partial reform that only exempts young first-time homebuyers from the transfer tax and is financed with higher annual property taxes. The resulting welfare gains are more than one half of the welfare gains from the complete reform.

Recent stress episodes such as the 2021 failure of Archegos and the 2022 UK gilt markets crisis have shown how leverage in the non-bank financial intermediation sector can be a source of systemic risk and amplify stress in the wider financial system. We combine fund-level data with transaction-level information on derivatives and repurchase agreements to explore risks from leverage in alternative investment funds in the EU and to assess policy options to mitigate these risks.