Accounting for the rise in consumer bankruptcies


Tertilt, Michèle ; Livshits, Igor ; MacGee, Jim



DOI: https://doi.org/10.3386/w13363
URL: https://www.nber.org/papers/w13363
Additional URL: https://ideas.repec.org/p/nbr/nberwo/13363.html
Document Type: Working paper
Year of publication: 2007
The title of a journal, publication series: NBER Working Paper
Volume: 13363
Place of publication: Cambridge, MA
Publication language: English
Institution: School of Law and Economics > VWL, Makro- u. Entwicklungsökonomie (Tertilt 2010-)
Subject: 330 Economics
Abstract: Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset holdings to evaluate several commonly offered explanations. We find that increased uncertainty (income shocks, expense uncertainty) cannot quantitatively account for the rise in bankruptcies. Instead, the rise in filings appears to mainly reflect changes in the credit market environment. We find that credit market innovations which cause a decrease in the transactions cost of lending and a decline in the cost of bankruptcy can largely accounting for the rise in consumer bankruptcy. We also argue that the abolition of usury laws and other legal changes are unimportant.

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.




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Tertilt, Michèle ; Livshits, Igor ; MacGee, Jim (2007) Accounting for the rise in consumer bankruptcies. NBER Working Paper Cambridge, MA 13363 [Working paper]


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