Institute for Macroeconomics

Dr. Christopher Krause

Academic Positions

since 09/2017 - Research Assistant at the Chair of Macroeconomics (Prof. Dr. Johannes Brumm), Karlsruhe Institute of Technology (KIT)

10/2015 - 08/2017 - Research Assistant at the Chair of Applied Economics (Prof. Dr. Ludger Linnemann), TU Dortmund University


02/2019 - Doctorate in Economics (Dr. rer. pol.), summa cum laude, Ruhr Graduate School in Economics/TU Dortmund University (full scholarship for three years); Thesis: The distributional implications of business cycles and fiscal policy (Committee: Ludger Linnemann, Roland Winkler, Philip Jung)

08/2012 - Master of Science in Economics, with distinction, Ruhr-University Bochum

08/2010 - Bachelor of Science in Mangement & Economics, Ruhr-University Bochum


Research Fields

Macroeconomics, Computational Economics, Heterogeneous Agent Models, Optimal Taxation, Business Cycles


Income redistribution, consumer credit, and keeping up with the Riches (with Mathias Klein), Journal of Money, Credit and Banking, forthcoming

In this study, we set up a DSGE model with upward looking consumption comparison and show that consumption externalities are an important driver of consumer credit dynamics. Our model economy is populated by two different household types. Investors, who hold the economy’s capital stock, own the firms and supply credit, and workers, who supply labor and demand credit to finance consumption. Furthermore, workers condition their consumption choice on the investors’ level of consumption. We estimate the model and find a significant keeping up-mechanism by matching business cycle statistics. In reproducing credit moments, our proposed model significantly outperforms a model version in which we abstract from consumption externalities.


Borrowing constraints, equilibrium default, and progressive taxation

In this paper, I investigate the effects of progressive taxation on private borrowing constraints and risk sharing. In particular, I construct an overlapping generations model with idiosyncratic productivity risk and default in equilibrium. The latter implies that loan prices on consumer credit are determined by individual default risk and thus, endogenous borrowing limits arise. As the main result, I find that public redistribution causes a significant crowding-out of private insurance. That is, increasing the progressivity of the income tax code leads to lower borrowing limits, which is especially pronounced for high-skilled households. Moreover, the dispersion in consumption responds barely to government policy, leading to the conclusion that redistribution might be an inefficient tool to dampen individual consumption fluctuations.


Fiscal policy over the business cycle

This paper emphasizes the role of household heterogeneity for the transmission of shocks to government expenditure in a business cycle model with incomplete markets and nominal rigidities. In particular, I investigate the aggregate and distributional effects of changes in government consumption and fiscal transfers, and evaluate if these effects vary according to the state of the economy. My findings indicate that household heterogeneity generates significant differences in fiscal multipliers and impulse responses of aggregate variables. For both shocks, I find that multipliers are generally higher when the shock hits in a recession. Key driver of these results is the countercyclicality of the fraction of borrowing constrained households. This leads to significant differences in the distributions of the marginal propensity to consume across the population, and ultimately to differences in the reactions of aggregate variables.