Markus Peters' thesis available for download

The thesis "Essays on Savings Behavior, Inflation Measurement, and Growth" consists of four chapters.

By combining detailed data and mathematical models, this thesis improves the understanding of pressing issues in many of today’s economies, including, for example, the effects of aging populations on pensions and wealth, as well as how to accurately measure inflation and economic growth.

 

How households adjust their savings in response to pension reform

The first part of the thesis studies how households adjust their savings in response to pension reforms that are designed to tackle sustainability problems due to aging populations. One conclusion is that individuals tend to not respond to these reforms. While a fully rational and perfectly informed individual should, in theory, increase her savings to counteract the fall in future pension income, a majority of the population does not adjust their savings at all in the data. This behavior is consistent with theories in which individuals are inattentive to pension reform due to low levels of financial literacy or limited pension knowledge.

 

Constructing accurate measures of inflation and growth

The second part employs product-level data on prices and sales to construct accurate measures of inflation and growth. Due to substitution towards products that experience low price growth—and away from products that become relatively expensive—aggregate inflation is lower than reported by official measures. Compared to the official Swedish Producer Price Index (PPI) of goods and services, annual inflation rates are 3–4 percentage points lower when properly accounting for substitution. Conversely, real growth rates of gross output are higher by the same amount.

Click here to download the thesis

Markus will also defend his thesis on 2 June.

Click here for more information on the defense