Conventional wisdom holds that individuals find it difficult to obtain new credit post-bankruptcy. Using credit bureau data, we test this hypothesis and show that more than 90% of bankrupt individuals receive credit shortly after filing. Individuals with good credit history prior to filing have...

Understanding the factors that influence arrears is crucial if policy makers wish to alleviate the problems caused by debt. But conventional estimates of repayment behaviour impose implausible assumptions about lender behaviour. However, an upper and lower bound for the effect of the...

We investigate the issue of pervasive credit constraints among US households. There is considerable debate about the incidence of constraints and whether the observed low borrowing in some groups of the population arises from low demand or from denial of credit. Using information on unsecured...

This paper investigates the causes of the Italian consumption bust of the early 1990s by estimating deviations from 'normal' consumption using household level data for 1985-94. The data set used is a particularly rich, but as yet unexplored, source recently released by ISTAT. It contains...

Defaulting on one's debts when experiencing an adverse event can help insure households against unexpected income risks. But the effect of allowing default on debt levels is ambiguous, not least because lenders may restrict access to credit. Hence the optimal punishment for bankruptcy is...

If households face uninsurable idiosyncratic earnings risk, theory predicts that redistributive tax and transfer systems have both an insurance and a distortionary effect. Exploiting the substantial variation of tax and transfer systems across U.S. states and over time, we investigate the...