Voter-Induced Municipal Credit Risk
利用《减税与就业法案》对州和地方税扣除的调整作为政策冲击，研究发现居民税负增加导致市政债券收益率显著上升，尤其在选民能直接影响融资决策的地区，揭示了选民在公共债务定价中的关键作用。
Policy shocks that increase the costs of public goods should simultaneously reduce voter support for them. We study the extent to which this creates a corresponding voter-induced municipal credit risk. We exploit changes to state and local tax (SALT) deductions from the Tax Cut and Jobs Act as a policy shock to the costs of local public goods. In a difference-in-differences framework with repeated bond trades, we find that jurisdictions with a higher share of residents who ceased deducting SALT (and therefore, face a higher marginal cost of local public goods) experienced a significant increase in municipal bond yields, with an average treatment effect of 8.3 basis points or 3.0% of the unconditional average yield spread. This effect is concentrated in areas where residents have a direct impact on municipal financing decisions via ballot initiatives. This study thus demonstrates the importance of voters in the pricing of public debt and extends the discussion of political and policy uncertainty and therefore, coordination and agency problems to the municipal context. This paper was accepted by Bo Becker, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.06072 .