AbstractThis paper estimates the dynamics of the personal-bankruptcy rate over the business cycle by exploiting large cross-state variation. We find that bankruptcy rates are significantly higher than normal during a recession and rise as a recession persists. After a recession ends, there is a hangover whereby bankruptcy rates begin to fall but remain above normal for several more quarters. Recovery periods see a strong bounce-back effect with bankruptcy rates significantly below normal for several quarters. Despite the significant increases in bankruptcies during recessions, the largest contributor to rising bankruptcies during these periods has tended to be the longstanding upward trend.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30759.
Date of creation: 23 Aug 2010
Date of revision:
Personal Bankruptcy; Recessions;
Other versions of this item:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
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