We use cross-state differences in minimum wage (MW) levels and county-level consumer bankruptcy rates from 1991–2017 to estimate the effect of changes in minimum wages on consumer bankruptcy. We find that Chapter 7 bankruptcy rates are significantly lower in counties belonging to states with higher MW compared to neighboring counties in the lower MW state: a 10% increase in MW decreases the bankruptcy rate by around 4%. Before the 2005 bankruptcy reform, this effect was almost twice as large as for the entire sample. Theoretically, we cannot sign the effect of MW on bankruptcy and credit utilization; we use a stylized consumption/saving model with default to illustrate the dependence on critical aspects of the model (costs of default, minimum wage levels, and disemployment effects) and to provide intuition on how to interpret our results. 

Advisors: Young, Eric, Gallmeyer, Michael, Bethune, Zachary, & Fostel, Ana

We quantitatively evaluate the effects of UI on bankruptcy from a general equilibrium perspective. First, we explore if the standard unsecured credit model extended with labor market search and matching frictions can account for the negative correlation between UI caps and bankruptcy observed in the data. The model can account for this fact only when estimated with the employment rate among bankruptcy filers as a target to match. Not matching this employment rate would underestimate the consumption smoothing benefits of UI cap increases. Second, we consider different policy counterfactuals regarding the UI replacement rate to study the effect of UI on the bankruptcy rate, interest rate, debt, and welfare. With bankruptcy available, there are significant positive welfare gains from increasing the replacement rate. Increasing the replacement rate from 50 to 55 percent would improve welfare by around 3.5 percent of lifetime consumption.

We document empirical evidence that overall bankruptcy rates are lower in states with more generous UI caps. In our preferred specification and relative to the sample mean, a 10 percent increase in the total amount of UI available during a given unemployment spell reduces the Chapter 7 bankruptcy rate by 1.87 percent.

El cambio climático implica un gran desafío a nivel global que comprende fenómenos como el aumento de la temperatura media, cambios en patrones de precipitación, incremento del nivel del mar, entre otros. La sequía es uno de los fenómenos climáticos que más afecta al Paraguay y repercute en la actividad económica. El objetivo del presente estudio consiste en verificar el impacto de los factores climáticos en el sistema financiero paraguayo en el periodo 2000-2021, teniendo en cuenta el sector agropecuario que es el principal afectado por situaciones climáticas adversas. Al efecto, se utiliza un modelo de vectores autorregresivos estructurales (SVAR), empleando como variables endógenas al déficit de precipitaciones, el PIB agropecuario, la cartera de créditos y las modificaciones en las condiciones de los créditos (renovados, refinanciados, reestructurados, medidas transitorias, reprogramaciones). Entre los principales hallazgos se tiene que una desviación estándar del déficit de precipitaciones conlleva a una caída en el PIB agropecuario, contracción del crédito y aumento en las modificaciones de las condiciones de los créditos. Se destaca la importancia de las medidas del BCP para hacer frente a eventos climáticos desfavorables y se insta a las autoridades correspondientes a tomar en consideración las políticas de mitigación del cambio climático.

In progress.