Macroeconomic Effects of Bankruptcy and Foreclosure Policies

S-Tier
Journal: American Economic Review
Year: 2016
Volume: 106
Issue: 8
Pages: 2219-55

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

I study the implications of two major debt-relief policies in the United States: the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) and the Home Affordable Refinance Program (HARP). To do so, I develop a model of housing and default that includes relevant dimensions of credit-market policy and captures rich heterogeneity in household balance sheets. The model also explains the observed cross-state variation in consumer default rates. I find that BAPCPA significantly reduced bankruptcy rates, but increased foreclosure rates when house prices fell. HARP reduced foreclosures by 1 percentage point and provided substantial welfare gains to households with high loan-to-value mortgages.

Technical Details

RePEc Handle
repec:aea:aecrev:v:106:y:2016:i:8:p:2219-55
Journal Field
General
Author Count
1
Added to Database
2026-01-26