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The Volume of Federal Litigation and the Macroeconomy

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  • Lance J. Bachmeier Patrick Gaughan
  • Norman R. Swanson

Abstract

In this paper we examine the extent to which fluctuations in a number of macroeconomic variables impact on the volume of federal litigation cases. In particular, the impact of aggregate U.S. GDP, consumption, inflation, unemployment, and interest rates on the volume of antitrust, bankruptcy, contract, personal injury, and product liability cases between the years 1960 and 2000 is examined using Granger causal analysis and vector autoregression models (see e.g. Granger (1988)). Our empirical findings suggest that there are several linkages between macroeconomic variables and the volume of litigation cases, in broad agreement with the findings of Siegelman and Donohue (1995), who find that unemployment is an important determinant of the (number and) quality of employment cases filed. Most noteworthy, we find that there is a causal linkage from output, consumption and inflation to the total volume of federal litigation, so that predictions of future litigation volume can be improved by using information contained in current macroeconomic aggregates. Causation in the other direction (i.e. from the volume of litigation to macroeconomic activity) is not found in the data, however. Based on impulse response analysis, it is seen that shocks to income, consumption and inflation immediately lead to an increase in the volume of litigation, with shocks to inflation having the largest impact, and shocks to consumption having a rather moderate impact. In addition, the long run impact that shocks to each of these variables has on the volume of litigation is positive, regardless of whether the VAR or VEC model is used. Here, again, the impact of consumption is quite moderate, though. Additionally, similar results arise when examining the relation between various individual measures of federal litigation volume and the macroeconomy. Thus, the volume of federal litigation does not appear to be immune to the business cycle, a finding which is in broad agreement with the findings of Si
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  • Lance J. Bachmeier Patrick Gaughan & Norman R. Swanson, "undated". "The Volume of Federal Litigation and the Macroeconomy," Working Papers 0209, East Carolina University, Department of Economics.
    • Handle: RePEc:wop:eacaec:0209
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    References listed on IDEAS

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    1. Carl Shapiro, 1991. "Symposium on the Economics of Liability," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 3-10, Summer.
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    4. Siegelman, Peter & Donohue, John J, III, 1995. "The Selection of Employment Discrimination Disputes for Litigation: Using Business Cycle Effects to Test the Priest-Klein Hypothesis," The Journal of Legal Studies, University of Chicago Press, vol. 24(2), pages 427-462, June.
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    1. repec:kap:iaecre:v:13:y:2007:i:1:p:81-96 is not listed on IDEAS
    2. Michael Reksulak, 2010. "Antitrust public choice(s)," Public Choice, Springer, vol. 142(3), pages 423-428, March.
    3. Samir Amine & Wilner Predelus, 2019. "The Persistence of the 2008-2009 Recession and Insolvency Filings in Canada," Economics Bulletin, AccessEcon, vol. 39(1), pages 84-93.
    4. Bielen, Samantha & Peeters, Ludo & Marneffe, Wim & Vereeck, Lode, 2018. "Backlogs and litigation rates: Testing congestion equilibrium across European judiciaries," International Review of Law and Economics, Elsevier, vol. 53(C), pages 9-22.
    5. Carson Bays, 2007. "The Determinants of Tying Litigation, 1961–2001," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(1), pages 81-96, February.
    6. World Bank Group, 2014. "Serbia Judicial Functional Review," World Bank Publications - Reports 21531, The World Bank Group.
    7. Alan Marco & Shawn Miller, & Ted Sichelman, 2015. "Do Economic Downturns Dampen Patent Litigation?," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(3), pages 481-536, September.

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