Consumer Bankruptcy and Mortgage Default

Florian Oswald, Costas Meghir and Wenli Li
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Wenli Li: Federal Reserve Bank of Philadelphia

No 1260, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We specify and estimate a rich model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven both by house price shocks and income shocks, while bankruptcy is governed by the basic institutional framework in the US as implied by chpater 7 and chapter 13. The model is estimated using micro data on credit reports and mortgages combined with individual level data from the American Community Survey. We perform several counterfactual experiments with the model which investigate welfare aspects of an important reform of the US consumer bankruptcy code implemented in 2006.

Date: 2017
New Economics Papers: this item is included in nep-dge and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1260

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