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U.S. Municipal Yields and Unfunded State Pension Liabilities

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Listed:
  • Lekniute, Z.
  • Beetsma, R.M.W.J.

    (Tilburg University, School of Economics and Management)

  • Ponds, Eduard

    (Tilburg University, School of Economics and Management)

Abstract

We present empirical evidence that municipal bond yields are increasing in the pension debt towards U.S. state civil servants. However, positive yield effects of both pension and explicit debt are found only for the period since the start of the crisis, suggesting that the crisis triggered awareness of budgetary sustainability. The marginal yield effect of higher pension debt is smaller than that of higher explicit debt, but still economically meaningful. The effect of higher pension debt seems stronger when using market values of pension assets than actuarial values, suggesting that investors pay more attention to market values.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lekniute, Z. & Beetsma, R.M.W.J. & Ponds, Eduard, 2017. "U.S. Municipal Yields and Unfunded State Pension Liabilities," Other publications TiSEM 8d75122f-0eb8-4517-af54-8, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:8d75122f-0eb8-4517-af54-8ffb1773dbab
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    2. Jha, Chandan Kumar & Joshi, Swarup, 2023. "Municipal bankruptcies and crime," International Review of Financial Analysis, Elsevier, vol. 89(C).
    3. Nakhmurina, Anya, 2018. "Does Fiscal Monitoring Make Better Governments? Evidence from US Municipalities," Working Papers 284, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.

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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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