Nonbusiness Bankruptcies and the Law: Some Empirical Results

A model of risk reduction is used to analyze personal bankruptcy rates. The model shows how state and federal laws can affect the quantity of resources that lenders devote to reducing the risk of making bad loans. Unanticipated events cause changes in bankruptcy rates because they alter the costs and benefits of bankruptcy to both creditors and debtors. Results of other studies are shown to be consistent with this model. Data for 1980 are then used to test the model. Asset exemption laws have a significant impact on bankruptcy rates that is consistent with the model. Unanticipated economic events are also found to have significant effects on bankruptcy rates.     

Common Divisors,Payout Persistence,and Return Predictability

In the finance and accounting literature, the use of a common divisor in the dependent and independent variables of ordinary least‐squares regressions is commonplace. What goes less recognized, however, is that their use induces spurious correlation between the regression variables and invalidates standard testing procedures. This paper analyses the common divisor problem by outlining analytical results concerning the expected R² and providing a simulation procedure that generates test statistics from which critical values can be drawn. To illustrate the procedure, we re‐investigate payout yield return predictability findings that have appeared in the literature and show that the results are spurious.     

Keynesian Inefficiency and Optimal Policy: A New Monetarist Approach

A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A Taylor rule neither implies determinacy, nor does it support an efficient outcome. An optimal policy yields an efficient and determinate allocation of resources, but equilibrium policy actions, wages, and prices are indeterminate at the optimum.     

Trends in the Intergenerational Elasticity of Family Income in the United States

This paper asks whether the degree to which our incomes resemble our parents’ incomes has changed over time. After comparing various methods of correcting for differences in the ages at which successive birth cohorts are observed, and correcting for sample attrition, I find no evidence of a linear trend in the intergenerational elasticity of family income for those born into the Panel Study of Income Dynamics between 1952 and 1975 and observed as adults between 1977 and 2000.     

Trends in real wages during the industrial revolution: a view from across the Irish Sea

This article calculates cost of living indices for Ireland between 1785 and 1870 and real wage indices for agricultural labourers, textile workers, and building workers. These indices show gains in real wages which are not consistent with current hypotheses about widespread pre-Famine immiseration, though textile workers did experience a reduction in earning power. Before the Famine, wages proved sticky downwards in the face of falling prices; after the Famine, money wages rose faster than prices. A revised UK index suggests that real wages began their increase earlier, in the 1820s, and increased by around an additional 10 percentage points by 1870.