Igor Livshits

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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(More)
  • Christopher Woodruff, Li Hao, +4 authors John Roberts
  • 2011
3349 Firms routinely rely on the goodwill of their trading partners. In developed economies, ongoing relationships complement formal contracts in mitigating holdup and facilitating transactions (Stewart Macaulay 1963). In developing economies, where contracts enjoy little legal protection, long-term relationships are even more critical for trade (John(More)
2272 A large literature documents that several economic decisions occur infrequently. For instance, individual investors adjust their portfolios sporadically even though the prices of many assets experience large fluctuations at high frequency. Similarly, firms do not reset the price every time the costs of inputs change. These infrequent adjustments at the(More)
Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households’ earnings, age and current asset holdings to evaluate several commonly offered explanations. We(More)
We examine a monetary economy wherein endogenous asset market segmentation permits the extent of household participation in open market operations to vary smoothly with changes in aggregate conditions. While we impose no stickiness at the microeconomic level in either prices or portfolio adjustment, we find that our flexible asset market segmentation can(More)
We study optimal redistribution and insurance in a lifecycle economy with privately observed idiosyncratic shocks. We characterize Pareto optima, show the forces that determine the optimal labor distortions, and derive closed form expressions for their limiting behavior. The labor distortions for high-productivity shocks are determined by the labor(More)
Banks have historically provided mutual insurance against asset risk, where the insurance arrangement itself was characterized by limited enforcement. This paper shows that a non-trivial interaction between asset and liquidity risk plays a crucial role in shaping optimal banking arrangements in the presence of limited enforcement. We find that liquidity(More)
I study the implications of various bankruptcy regimes for student loans on college investment, human capital accumulation, and earnings in a heterogeneous life-cycle economy with risky human capital investment. The option to discharge one’s debt under a liquidation regime helps alleviate some of the risk of investing in human capital. However,(More)
This paper studies how countries in different stages of development respond to the emergence of a poor, giant economy. A model is developed that highlights an important channel by which an emerging giant can affect growth in other countries, either positively or negatively, and an extension is developed that highlights how an emerging giant influences a(More)