Consumer durables and risky borrowing: The effects of bankruptcy protection

• 成果类型: Article
• 署名作者: Pavan, Marina
• 署名单位: University College Dublin
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2008.09.009
• 发表日期: 2008
• 页码: 1441-1456
• 关键词: bankruptcy; Durable wealth; unsecured debt; Saving

摘要

There exist substantial differences in the generosity Of bankruptcy protection across U.S. states. This paper exploits cross-state variation in exemption levels to assess the dual role Of durable goods as informal collateral for unsecured debt and self insurance against had shocks to earnings. The generosity of bankruptcy protection is found to change both the incentives and the ability of households to accumulate durable wealth. The gains from a high level of insurance are reduced by the effect of tighter credit constraints, so that the net effects of a change in exemption are very small. A more generous bankruptcy regulation reduces net durable wealth in the first half of the life cycle. In addition, the optimal level of exemption is positive but low. (C) 2008 Elsevier B.V. All rights reserved.