Optimal consumption, investment and housing decision

Specialeforsvar ved Lars Bo Krabbe

Titel: Optimal consumption, investment and housing decision

Abstract: This thesis examines explicit solutions to life-utility maximization problems for a household with different house dynamics and utilization rates of increased house price. In order to highlight what the common methods are, this thesis analyses some relevant papers from the field of optimal house problems and consumption. At the same time the different elements in the individual articles are analyzed. This knowledge is used in the
thesis’s analysis of household problems. The household’s optimal solutions for the various house dynamics and utilization rates are compared to find out what differences it makes to the household. The development of the optimal invested amounts of money is different for individual house dynamics issues. It is notable that problems with different house dynamics gives approximately equal results. There are noticeable differences in households’ total wealth at the different levels of the utilization rates depending on the development of the house prices. The situation where a household cannot short sell stocks is analyzed. It is most optimally not to short sell stocks if the house prices changes are utilized

Vejleder: Mogens Steffesen
Censor:   Kenneth Bruhn, PenSam