Fed/GFLEC Financial Literacy Seminar Series

December 1, 2022

12:00 PM - 1:00 PM ET

Seminar III: Financial Returns to Household Inventory Management

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Lorenz Kueng

Associate Professor of Economics, University of Lugano






Households tend to hold substantial amounts of non-financial assets in the form of consumer goods inventories that are unobserved by traditional measures of wealth, about $1,100 on average. Such holdings can eclipse total financial assets among households in the lowest income quintile. Households can obtain significant financial returns from shopping strategically and optimally managing these inventories. In addition, they choose to maintain liquid savings – household working capital – not just for precautionary motives but also to support this inventory management. We demonstrate that households with low levels of inventory earn high returns from investing in household working capital, well above 20%, though returns decline rapidly as inventory levels increase. We provide evidence from scanner and survey data that supports this conclusion. Inventory management of consumer goods provides one alternative to investments in risky financial markets at low levels of liquid wealth and can induce uneven spending behavior alongside smooth consumption.


Prof. Küng joined the economics department of USI as a Senior Assistant Professor in 2019. He earned a PhD in Economics from the University of California, Berkeley in 2012, both Bachelor and Masters degrees in economics and mathematics from the University of Fribourg in 2005, and a diploma in economics from the Swiss National Bank’s Study Center Gerzensee in 2006.

He was an Assistant Professor of Finance at the Kellogg School of Management at Northwestern University from 2012 to 2019 and served as a Research Economist at the Federal Reserve Bank of Chicago in 2019. He is a Research Affiliate of the Centre for Economic Policy Research (CEPR) in London, a Faculty Research Fellow of the National Bureau of Economic Research (NBER) in Boston, and a Faculty Member of the Swiss Finance Institute (SFI).

His research focuses on household economics and finance, public finance, and applied macroeconomics. His latest research investigates the riskiness of owning vs. renting housing, the consumption response of households to unconditional cash transfers, and how borrowing constraints affected the effectiveness of fiscal policies in stimulating the economy during the financial crisis. His research has been published in leading economics and management journals, such as the Quarterly Journal of Economics, the Journal of Monetary Economics, the Journal of Public Economics, or Management Science.

His work has also been cited and discussed in various media outlets such as The Economist, The Financial Times, The New York Times, Bloomberg, CBS News, Slate.com, CentralBanking.com, Vox, Die Neue Zürcher Zeitung, or Das Handelsblatt.

He teaches Household Economics and Finance at the bachelor as well as at the PhD level, which is joint listed with the SFI.