Download or read book Essays in Macroeconomics and Household Finance written by Eirik E. Brandsaas and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies how family resources interact with financial constraints in households' savings and investment decisions. The first chapter quantifies the contribution of parental transfers to the homeownership rate of the young. Parents and children interact without commitment in an incomplete markets life-cycle overlapping generations model with housing. Transfers increase homeownership by relaxing borrowing constraints and reducing risks associated with homeownership. Moreover, children with wealthy parents may overinvest in housing to extract larger future transfers from their parents. I find that transfers increase the homeownership rate among households aged 25-44 by 15 p.p. (31%). Finally, I show that policies that reduce sales costs are more effective than relaxing financial constraints or purchase costs at decreasing the role of parental wealth in children's housing outcomes. The second chapter studies whether homeownership can explain the low stock market participation rate in the United States. I first show that the low participation rate is driven by high exit rates among participants and that exit is frequently tied to house purchases. I then extend a workhorse life-cycle model of portfolio choice to include housing. After estimating the models, with and without housing, I find that housing improves model fit. In particular, housing reduces the unexplained participation rate between the model and the data by 71%. Moreover, housing improves model fit by increasing the exit rate among young and middle-aged households and decreasing homeowners' liquid wealth. The third chapter studies the effect of parental wealth on a household's risk-taking in asset and labor markets. Together with my co-authors, we show that households with wealthier parents take more risk in their portfolio and labor market choices. Since risk in one dimension can be offset by choices in other assets, we develop a combined risk measure robust to this concern. Our results have implications on the persistence of wealth across generations and wealth inequality. Our results provide one explanation for the finding that returns to wealth are increasing in wealth since wealth is correlated over generations.