English, Article, Journal or magazine article edition: The macroeconomics of U.S. consumer bankruptcy choice : chapter 7 or chapter 13? Pierre-Daniel G. Sarte; Wenli Li

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Bookmark: http://trove.nla.gov.au/version/74863
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The macroeconomics of U.S. consumer bankruptcy choice: Chapter 7 or Chapter 13?
Author
  • Pierre-Daniel G. Sarte
  • Wenli Li
Physical Description
  • preprint
Notes
  • Because of the recent surge in U.S. personal defaults, Congress is currently debating bankruptcy reform legislation requiring a means test for Chapter 7 filers. This paper explores the effects of such a reform in a model where, in contrast to previous work, bankruptcy options and production are explicitly taken into account. Our findings indicate that means testing would not improve upon current bankruptcy provisions and, at best, leaves aggregate filings, output, and welfare unchanged. Put simply,given already existing provisions, the introduction of an efficient means test would not bind. However, we do find that a tightening of existing bankruptcy laws, in the form of lower Chapter 7 asset exemptions, can be welfare improving. Contrary to previous studies, the analysis also suggests that eliminating bankruptcy entirely would cause significant declines in both output and welfare.
  • RePEc:fip:fedrwp:02-01
  • Because of the recent surge in U.S. personal defaults, Congress is currently debating bankruptcy reform legislation requiring a means test for Chapter 7 filers. This paper explores the effects of such a reform in a model where, in contrast to previous work, bankruptcy options and production are explicitly taken into account. The authors' findings indicate that means testing would not improve upon current bankruptcy provisions and, at best, leaves aggregate filings, output, and welfare unchanged. Put simply, given already existing provisions, the introduction of an efficient means test would not bind. However, we do find that a tightening of existing bankruptcy laws, in the form of lower Chapter 7 asset exemptions, can be welfare improving. Contrary to previous studies, the analysis also suggests that eliminating bankruptcy entirely would cause significant declines in both output and welfare.
  • Bankruptcy
  • RePEc:fip:fedpwp:03-14
Language
  • English
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