Publication: Accounting for the Rise in Consumer Bankruptcies
All || By Area || By Year| Title | Accounting for the Rise in Consumer Bankruptcies | Authors/Editors* | Igor Livshits, James MacGee, Michele Tertilt |
|---|---|
| Where published* | American Economic Journal Macroeconomics |
| How published* | Journal |
| Year* | 2010 |
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| Abstract |
Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age adults in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive lenders to evaluate several commonly o®ered explanations. We ¯nd that increased uncertainty (income shocks, expense uncertainty) cannot account quan- titatively for the rise in bankruptcies. Instead, the rise in ¯lings appears mainly to re°ect changes in the credit market environment: a decrease in the transactions cost of lending and in the cost of bankruptcy. We also argue that the abolition of usury laws and other legal changes were unimportant. |
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