Accounting for the Rise in Consumer Bankruptcies

2005

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, stories related to a change in the credit market environment are more plausible. In particular, we find that a combination of a decrease in the transactions cost of lending and a decline in the cost of bankruptcy does a good job in accounting for the rise in consumer bankruptcy. We also argue that the abolition of usury laws and other legal changes are unimportant.

2016

There are large countercyclical fluctuations in U.S. bankruptcy filings and real credit card interest rates, while unsecured credit is pro-cyclical. To asses whether these observations are consistent with standard theory, we introduce aggregate fluctuations into a heterogeneous agent life-cycle incomplete market model calibrated to match key features of the U.S. economy and bankruptcy system. Household borrowing is priced by competitive financial intermediaries who can observe households’ earnings, age and current asset holdings. Aggregate fluctuations change the probability of persistent shocks to household earnings, with negative shocks being more likely in recessions. This leads to asymmetric effects of credit pricing on different household types over the business cycle, since interest rates vary endogenously with borrowers’ default risk. When the only source of aggregate uncertainty is income fluctuations, the calibrated model dramatically understates the volatility of bankruptc...

American Economic Review, 2007

The Review of Economic Studies, 2016

URL: https://www.archeokz.com/index.php/archeokz/issue/view/22

Τα Ιστορικά, vol.66, 2017

(Pavia, 9-11 maggio 2024) Ordine degli Avvocati di Pavia - Università degli Studi di Pavia - Dipartimento di Giurisprudenza, 2024

L'anno passato è stato caratterizzato da significativi approdi giurisprudenziali, che hanno interessato diversi settori del diritto civile: non solo contratto e responsabilità civile, ma anche obbligazioni, persone e famiglia, successioni, donazioni e diritti reali. Il seminario intende fornire una sintetica ma completa retrospettiva sul contributo offerto dalla giurisprudenza nel corso del 2023. Ogni relazione riassume il contenuto di una o più sentenze e valuta le soluzioni adottate confrontandole con la giurisprudenza anteriore. I relatori provengono da diverse realtà accademiche italiane.