Essays in macroeconomics

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University of Alabama Libraries

We investigate three topics in this dissertation. In Chapter 1 we investigate a matter related to Chapter 7 non-business bankruptcy in the United States. We find that state homestead exemptions tend to have a positive effect on state-level Chapter 7 non-commercial bankruptcy filing rates and tend generally to be statistically significant at the five-percent level or lower. Additionally, consistent with existing literature, we tend to find a positive and marginally statistically significant effect of past divorce rates on current filing rates. Moreover, our results suggest that unemployment has a positive effect on filing rates, while home prices have a negative effect. We use a balanced panel data set of U.S. states from the beginning of 2006 until the end of 2008. Homestead exemptions are chosen as a proxy for total asset exemptions. In Chapter 2 we investigate total U.S. household-sector debt and its relationship to several other variables using a vector error correction model and vector autoregression models. We find that per-capita household debt levels appear to be reduced by positive shocks to intermediate- and long-term interest rates. In addition, the permanent income hypothesis is corroborated in up to two areas. First, in some specifications consumption shocks, representing permanent income shocks, have a modest positive effect on debt levels. Second, shocks to home prices increase borrowing. Error variance decompositions suggest that current debt levels have a large portion of the predictive power for future debt levels. In Chapter 3 we investigate U.S. consumer revolving credit unsecured by real estate and its relationships to several other variables using vector autoregressions. We make several findings. For example, we find evidence that an increase in the average interest rate faced by credit card holders has no discernible downward effect on debt levels but that an increase in the federal funds rate does have a downward effect. Increases in the unemployment rate also seem to reduce credit use, probably due to supply constraints. Increases in permanent income, represented by consumption, and in asset prices have positive effects on credit use.

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