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dc.contributor.authorMankart, Jochenen_US
dc.date.accessioned2011-08-12T09:51:06Z-
dc.date.available2011-08-12T09:51:06Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/48703-
dc.description.abstractI develop a heterogenous agent life-cycle model that examines the effects of the US personal bankruptcy law on bankruptcy filings and welfare. In addition to facing uncertainty over their labor income, agents also face wealth shocks that stem from unexpected changes in family composition or from unexpected medical expenses. I allow agents to borrow and save simultaneously. Some households borrow at high interest rates while simultaneously saving at low interest rate because of the option value of defaulting. This is consistent data on household assets. Under chapter 7 of the US bankruptcy law, consumers can keep all wealth up to an exemption level. I show that introducing exemption levels is of particular importance in the presence of wealth shocks. My quantitative evaluations show that changes in the exemption level have an impact only for very low exemption levels. Thus, ignoring them biases welfare results. But this impact fades out rather quickly. The reason is that almost no household is affected by medium to high exemption levels because those households who might default do not have much wealth. The welfare results of changes in the exemption level are rather small, less than 0.1% of annual consumption. In contrast to the earlier literature, but consistent with the data, I do not find a strong positive relationship between the exemption level and default rates.en_US
dc.language.isoengen_US
dc.publisherZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft Kiel und Hamburgen_US
dc.relation.ispartofseriesBeiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: The Life-Cycle Consumption Model E16-V2en_US
dc.subject.jelE21en_US
dc.subject.jelK35en_US
dc.subject.jelD91en_US
dc.subject.ddc330en_US
dc.titleThe optimal Chapter 7 exemption level in a life-cycle model with asset portfoliosen_US
dc.typeConference Paperen_US
dc.identifier.ppn67186887Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
dc.identifier.repecRePEc:zbw:vfsc11:48703-
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft - Lektionen aus der Krise

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