04.02.2026

New publication in the American Economic Review

Prof. Dr. Ralph Luetticke co-authors the paper „Financial Frictions: Micro versus Macro Volatility“

We are pleased to announce that Prof. Dr. Ralph Luetticke has co-authored a new article published in the February 2026 issue of the American Economic Review: “Financial Frictions: Micro versus Macro Volatility” (with *Renato Faccini, Seungcheol Lee, Morten O. Ravn, and Tobias Renkin). (Amerikanische Wirtschaftsvereinigung)

The paper combines household finance evidence with a HANK model featuring frictional financial intermediation, highlighting how time-varying consumer credit spreads shape both aggregate dynamics and distributional outcomes.

Key takeaways

Using Danish administrative household data (about 16 million observations, 2003–2018), the authors document strong heterogeneity across the wealth distribution in how credit spreads relate to household asset dynamics and consumption.
Countercyclical consumer credit spreads imply countercyclical MPCs and amplify distributional effects of aggregate shocks.
In the model, macro stabilization (e.g., muted financial accelerator) can come with higher micro volatility and lower welfare for households due to changing spreads and reduced insurance against idiosyncratic shocks.

If you are interested in the whole paper, you can find it using the follwing DOI: 10.1257/aer.20211219

Back