Konferenzbeitrag
Tighter Credit and Consumer Bankruptcy Insurance
How does bankruptcy affect the dynamics of aggregate consumption? We quantify the trade-off between the insurance and creditworthiness effects of bankruptcy in response to tighter credit. We show that bankruptcy dampens the effect of tighter credit on aggregate consumption on impact because it allows borrowers to sustain consumption, but statutory exclusion from the credit market reduces consumption smoothing over time and slows the recovery. Default costs play a crucial role in bankruptcy decisions and also shape consumption dynamics. We find that the 2005 BAPCPA reform, by making bankruptcy more costly, worsened the negative welfare effects of the subsequent credit tightening.
- Sprache
-
Englisch
- Erschienen in
-
Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics
- Klassifikation
-
Wirtschaft
- Thema
-
Financial Shocks
Aggregate Consumption Dynamics
Chapter 7
BAPCPA,Bank-Intermediated Credit
Transitional Dynamics
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Mendicino, Caterina
Cavalcanti, Tiago
Antunes, Antonio
Peruffo, Marcel
Villamil, Anne
- Ereignis
-
Veröffentlichung
- (wer)
-
ZBW - Leibniz Information Centre for Economics
- (wo)
-
Kiel, Hamburg
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
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Objekttyp
- Konferenzbeitrag
Beteiligte
- Mendicino, Caterina
- Cavalcanti, Tiago
- Antunes, Antonio
- Peruffo, Marcel
- Villamil, Anne
- ZBW - Leibniz Information Centre for Economics
Entstanden
- 2021
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