Portal de Periódicos da CAPES

Macroeconomic Effects of Bankruptcy and Foreclosure Policies

2016; American Economic Association; Volume: 106; Issue: 8 Linguagem: Inglês

10.1257/aer.20120512

1944-7981

Kurt Mitman,

Housing, Finance, and Neoliberalism

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. (JEL D14, K35, R31)