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Partisanship, Political Institutions, and Debt Issues

Author

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  • Zachary Peskowitz
  • Suhas A Sridharan

Abstract

We investigate the effect of gubernatorial partisanship on municipal bond issues in the United States using a regression discontinuity design. Our unique dataset of individual bond issues allows us to precisely measure the issuing behavior of different entity types—states, state authorities, and localities—and examine how the response of debt issues to gubernatorial partisanship varies across jurisdictions. The election of Democratic governors results in higher levels of debt issuance, with an annual per capita increase of approximately $73–$147 in states that lack debt referenda requirements. In states with debt referenda requirements, the estimated per capita annual effect of a Democratic governor is approximately $23–$28. We find that governors are not able to circumvent debt referenda requirements by issuing debt through state authorities or local governments.

Suggested Citation

  • Zachary Peskowitz & Suhas A Sridharan, 2018. "Partisanship, Political Institutions, and Debt Issues," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(3), pages 395-424.
    • Handle: RePEc:oup:jleorg:v:34:y:2018:i:3:p:395-424.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewy010
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    Cited by:

    1. Dane M. Christensen & Hengda Jin & Suhas A. Sridharan & Laura A. Wellman, 2022. "Hedging on the Hill: Does Political Hedging Reduce Firm Risk?," Management Science, INFORMS, vol. 68(6), pages 4356-4379, June.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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