Canadian households are saddled with unprecedented amounts of debt. As a percentage of income, debt levels of Canadians are higher than at any point in recent history and are now higher than those of American households. Recent debates have largely focused on the housing market and on the risks...

Financial innovations are a common explanation for the rise in credit card debt and bankruptcies. To evaluate this story, we develop a simple model that incorporates two key frictions: asymmetric information about borrowers' risk of default and a fixed cost of developing each contract lenders...

Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset...