This paper investigates the causes of the Italian consumption decline of the early 1990’s by estimating deviations from normal consumption for 1985-94. The paper uses household data from the Survey of Family Budgets (SFB) from ISTAT, a particularly rich but relatively unexplored source...

Bankruptcy acts as insurance if the decision to default is negatively correlated with income shocks. However, whether bankruptcy provides insurance is dependent on the punishment for default. Such rules can instead cause the consumer to be credit constrained. If debts are not fully enforceable,...

This paper investigates the causes of the Italian consumption bust of the early 1990s by estimating deviations from 'normal' consumption using household level data for 1985-94. The data set used is a particularly rich, but as yet unexplored, source recently released by ISTAT. It contains...

Both personal bankruptcy and redistributive taxes can insure households’ consumption risk and both vary considerably across US states. We derive sufficient conditions under which more redistributive taxation makes bankruptcy exemptions less attractive both for the intratemporal insurance and...

Bankruptcy (defaulting on one's debts) acts as insurance if it allows default in cases of negative income shocks. However, if debts are not fully recoverable, lenders may instead react by limiting the amount that they allow households to borrow. This upper borrowing limit will increase as the...

The study quantifies stock market and housing market wealth effects on households' non-durable consumption using Italian household panel data (SHIW) of 1989-2002. We found all households react similarly to aggregate housing and stock market gains. We also found statistically and economically...

Several papers have documented that US consumers can not fully insure themselves against all their idiosyncratic risks, but little is understood about which mechanisms provide insurance. We investigate whether, as some suggest, progressive taxes provide additional insurance. The methodology...

Defaulting on one's debts when experiencing an adverse event can help insure households against unexpected income risks. But the effect of allowing default on debt levels is ambiguous, not least because lenders may restrict access to credit. Hence the optimal punishment for bankruptcy is...

A distinguishing feature among households is whether adult members work or not, since the occupational status of adults affects their available time for home activities. Using a survey method in two countries, Belgium and Germany, we provide household incomes that retain the level of well-being...