Polluting Public Funds: The Effect of Environmental Regulations on Municipal Bonds
研究发现环境政策不确定性影响市政债券收益：新污染标准提案后收益率上升，最终确定后下降；合规状态公告后，合规县收益率下降，新违规县上升。这些短期反应与长期污染和房价变化相关。
We present two findings on how environmental policy uncertainty impacts municipal bond returns. First, yields increase after a new pollution standard is proposed but decrease after this standard is finalized. Second, after annual announcements of compliance status, yields fall for counties that remain in compliance but increase for newly noncompliant counties. We present suggestive evidence linking these short-run municipal bond market reactions to long-run changes in pollution and housing prices. Our findings suggest that increases in either regulatory stringency or uncertainty over future environmental policy increase the cost of municipal debt raised to fund schools, hospitals, and critical infrastructure. This paper was accepted by Tomasz Piskorski, finance. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.02340 .