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PERSONAL-BANKRUPTCY CYCLES

  • Thomas A. Garrett (a1) and Howard J. Wall (a2)
  • DOI: http://dx.doi.org/10.1017/S1365100512001058
  • Published online: 01 March 2013
Abstract

This 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 above trend during a recession and rise as a recession persists. After a recession ends, there is a hangover in which bankruptcy rates begin to fall but remain above trend for several more quarters. Recovery periods see a strong bounce-back effect, with bankruptcy rates significantly below trend 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.

Copyright
Corresponding author
Address correspondence to: Howard J. Wall, ISEE, School of Business and Entrepreneurship, Lindenwood University, 209 S. Kingshighway, St. Charles, MO 63301, USA; e-mail: hwall@lindenwood.edu.
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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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