• Understand intertemporal financial choices for poor and rich people.
• Develop long-term financial strategies.
• Grasp the fundamentals of pension fund, mortgages, digital currencies and other financial assets for long-term financial planning.
• Develop critical perspectives on public policies on household finance in poor and rich countries.
• Establish a solid cost/benefit framework for policies related to wealth and income inequality.

Course content:

Financial education is lacking in most countries, developed countries included. The main goal of the course is to develop an integrated framework of household finance for private and public use. Students will learn how to maximize their intertemporal utility given their life-cycle income, how to become rich if they want to pay the price for it, how to save, borrow, and purchase property (and if they should do it at all), and more. In terms of public policy, students should leave the course with a holistic view of wealth and income inequality, how poverty restrict sound financial decision-making and how policies can improve social outcomes by reducing (or increasing!) income inequality. 
 
The first goal of the course is to develop a sound integrated framework for individuals to manage their finances with a long-term horizon in mind (based on the permanent income hypothesis). Such a framework does include learning how to integrate bitcoin and other digital currencies and derivatives in long-term portfolios (although that is not the main focus of the framework). Secondly, we will analyze the impact of credit restrictions and hyperbolic discounting in household financial management in poor and middle-income countries. Finally, we will investigate the role of public policy in improving household financial decisions. Importantly, household finance is stuck in low-value equilibria where people's inability to save and invest efficiently lead to lower productivity growth and value added for all. In this final module, we will explain the determinants of wealth and income inequality and how economic policies can improve social outcomes. 

Course structure:
 
Class 1 Life-cycle income hypothesis: do you want to be rich? 
Class 2 Financial markets and investment strategies. 
Class 3 Financial markets and investment strategies: should you buy a house? 
Class 4 Digital currencies and derivatives: leveraging at which cost? 
Class 5 Financial Literacy in poor and rich countries. 
 
Feedback: Approval of final paper. 
 
Class 6 Credit constraints, hyperbolic discounting and making choices while poor.  
Class 7 Poor economics and policymaking. 
Class 8 Wealth and income inequality. 
Class 9 Savings glut, pension funds and public policies in rich countries. 
Class 10 The Sustainability Credit Score System and green finance. 
Class 11 Comprehensive Review.

6-week course.

Preliminary Assignment: 

The course coordinator uploads Preliminary Assignment on Canvas at the end of May. It is expected that students participate as it will be included in the final exam, but the assignment is without independent assessment and grading.

Mandatory readings:

Milanovic, B. (2015). Global inequality of opportunity: How much of our income is determined by where we live?. Review of Economics and Statistics, 97(2), 452-460. 
Aguiar, M., & Hurst, E. (2016). Permanent-Income Hypothesis. The New Palgrave Dictionary of Economics, 1-5. 
Carlson, K., Kim, J., Lusardi, A., & Camerer, C. F. (2015). Bankruptcy rates among NFL players with short-lived income spikes. American Economic Review, 105(5), 381-84. 
Duflo's Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Journal of Economic Literature, 50(1), 103-114. 
Planning for retirement: Long-term savings and investment in the UK. Blackrock.  
How People Plan for Retirement, by Anna Rappaport, Chairperson, Society of Actuaries Committee on Post-Retirement Needs and Risks 
Brown, M., Grigsby, J., Van Der Klaauw, W., Wen, J., & Zafar, B. (2016). Financial education and the debt behavior of the young. The Review of Financial Studies, 29(9), 2490-2522. Fixed-income derivatives made simple: What a trustee needs to know 
Banerjee, A. V., & Duflo, E. (2007). The economic lives of the poor. Journal of economic perspectives, 21(1), 141-168. 
Böhme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, technology, and governance. Journal of Economic Perspectives, 29(2), 213-38. Zeidan, R. (2018) Economics of Global Business, MIT Press, chapter 12. 
Guesmi, K., Saadi, S., Abid, I., & Ftiti, Z. (2019). Portfolio diversification with virtual currency: Evidence from bitcoin. International Review of Financial Analysis, 63, 431-437. Antonakakis, N., Chatziantoniou, I., & Gabauer, D. (2019). Cryptocurrency market contagion: market uncertainty, market complexity, and dynamic portfolios. Journal of International Financial Markets, 
Institutions and Money, 61, 37-51. 
Zeidan, R; Spitzeck, H. (2015) The Sustainability Delta: Considering Sustainability Opportunities in Firm Valuation, Sustainable Development, 23(6) 329-42. Lectures -8 and 9.   Zeidan, R.; Boechat, C.; Fleury, A. (2015). Developing a Sustainability Credit Score System. Journal of Business Ethics, 127 (283-296).

Additional relevant readings:

Cai, S., & Park, A. (2016). Permanent income and subjective well-being. Journal of Economic Behavior & Organization, 130, 298-319. 
Messy, F. A., & Monticone, C. (2016). Financial education policies in Asia and the Pacific. Retirement Planning From Start to Finish: Society of Actuaries. 
The global financial crisis and the evolution of markets, institutions and regulation, Journal of Banking & Finance 35, 502–511, (Moshirian, F., 2011).  
Brady, D., Giesselmann, M., Kohler, U., & Radenacker, A. (2018). How to measure and proxy permanent income: evidence from Germany and the US. The Journal of Economic Inequality, 16(3), 321-345. 
Milanovic, B. (2016). Global inequality: A new approach for the age of globalization. Harvard University Press. 
Shahzad, S. J. H., Bouri, E., Roubaud, D., & Kristoufek, L. (2019). Safe haven, hedge and diversification for G7 stock markets: Gold versus bitcoin. Economic Modelling