; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Consumer Bankruptcy: A Fresh Start"; ; "batchuser@example.com"; "Tertilt, Michèle", "MacGee, James C.", "Livshits, Igor"; "Federal Reserve Bank of Minneapolis"; "K35 - Personal Bankruptcy Law", "D91 - Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making", "D14 - Household Saving; Personal Finance"; "American consumer bankruptcy provides for a Fresh Start through the discharge of a household’s debt. Until recently, many European countries specified a No Fresh Start policy of life-long liability for debt. The trade-off between these two policies is that while Fresh Start provides insurance across states, it drives up interest rates and thereby makes life-cycle smoothing more difficult. This paper quantitatively compares these bankruptcy rules using a life-cycle model with incomplete markets calibrated to the U.S. and Germany. A key innovation is that households face idiosyncratic uncertainty about their net asset holdings (expense shocks) and labor income. We find that expense uncertainty plays a key role in evaluating consumer bankruptcy laws. "^^; "2003-01"; "2019-06-25T14:25:02.550544113+00:00"^^; "https://doi.org/10.21034/wp.617"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "Wed Oct 23 17:53:06 2019"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "462", "784", "476"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "617"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "Published in _American Economic Review_ (Vol. 97, Iss. 1, March 2007, pp. 402-418), https://doi.org/10.1257/aer.97.1.402."^^; ; "Publication" . ; .