Search Results

SORT BY: PREVIOUS / NEXT
Jel Classification:H74 

Newsletter
Exposure to Cyber Risk and Inadequate Cybersecurity Regulations: Evidence from Municipalities

In this article, which is based on a related working paper, we document the adverse effects of cyberattacks on municipalities and the ineffectiveness of current state regulation to stave off future cyberattacks. In the process of providing services to their citizens, state and local governments collect and store a wide range of sensitive personal information (data). Access to personal information, sometimes combined with a lack of adequate cybersecurity (FitchRatings, 2022), makes governments attractive targets for cyberattacks, in particular data breaches. Indeed, in our sample external data ...
Chicago Fed Letter , Volume 501

Journal Article
The Municipal Liquidity Facility

At the onset of the COVID-19 pandemic, state and local governments were among the sectors expected to experience the most severe distress. The combination of a sharply deteriorating revenue picture, a pressing need for additional expenditures, delays in the receipt of substantial taxes owed, and an inability to access the financial markets raised serious concerns among many observers about the ability of state and local governments to meet their public service delivery responsibilities. In April 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF) to ...
Economic Policy Review , Volume 28 , Issue 1

Working Paper
Municipal Markets and the Municipal Liquidity Facility

Municipal bond markets experienced a significant amount of strain in response to the COVID-19 crisis, creating liquidity and credit concerns among market participants. During the economic shutdown resulting from the pandemic, income tax revenues were deferred and sales tax revenues decreased beginning in spring 2020, while the cost of borrowing significantly increased for municipal issuers. To aid municipal borrowing needs, the Federal Reserve implemented the Municipal Liquidity Facility (MLF) on April 9, 2020. In this analysis we describe the municipal market conditions as they evolved ...
Working Papers , Paper 21-07

Working Paper
Flight to Liquidity or Safety? Recent Evidence from the Municipal Bond Market

We examine the effects of the COVID-19 pandemic and subsequent monetary and fiscal policy actions on municipal bond market pricing. Using high-frequency trading data, we estimate key policy events at the peak of the crisis by focusing on a sample of bonds within a narrow window before and after each policy event. We find that policy interventions, in particular those with explicit credit backstops, were effective in alleviating municipal bond market stress. Next, we exploit daily variation in traded municipal bonds and virus exposure across U.S. counties. We find a shift in how bond investors ...
Research Working Paper , Paper RWP 20-19

Working Paper
Sovereign Default in the US

In the absence of a judicial mechanism to reduce the debt burden of a sovereign member of our Union, the resolution process can be quick but perhaps too indifferent to the health, safety, and welfare of the affected residents. In this paper, I use evidence from the Arkansas state archives to provide a description of the events surrounding the default of the state in 1933. I examine the evolution of the negotiations, the outcomes, and the role of fiscal policy.
Working Papers (Old Series) , Paper 1609

Report
COVID Response: The Municipal Liquidity Facility

At the onset of the COVID-19 pandemic, state and local governments were among the sectors expected to experience the most severe distress. The combination of a sharply deteriorating revenue picture, a pressing need for additional expenditures, delays in the receipt of substantial taxes owed, and an inability to access the financial markets raised serious concerns among many observers about the ability of state and local governments to meet their public service delivery responsibilities. In April 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF) to ...
Staff Reports , Paper 985

Working Paper
Decentralization and Overborrowing in a Fiscal Federation

We build an infinite horizon equilibrium model of fiscal federation, where anticipation of transfers from the central government creates incentives for local governments to overborrow. Absent commitment, the central government over-transfers, which distorts the central-local distribution of resources. Applying the model to fiscal decentralization, we find when decentralization widens local governments? fiscal gap, borrowings by both local and central governments rise. Quantitatively, fiscal decentralization accounts for from 19 percent to 40 percent of changes in general government debt in ...
FRB Atlanta Working Paper , Paper 2018-9

Report
The Option Value of Municipal Liquidity: Evidence from Federal Lending Cutoffs during COVID-19

We estimate the option value of municipal liquidity by studying bond market activity and public sector hiring decisions when government budgets are severely distressed. Using a regression discontinuity (RD) design, we exploit lending eligibility population cutoffs introduced by the federal sector’s Municipal Liquidity Facility (MLF) to study the effects of an emergency liquidity option on yields, primary debt issuance, and public sector employment. We find that while the announcement of the liquidity option improved overall municipal bond market functioning, lower-rated issuers additionally ...
Staff Reports , Paper 988

Convening Identifies Key Resources for Communities Replacing Lead Service Lines

Communities across the United States are beginning to map and replace lead service lines (LSLs) to comply with new state and federal safe drinking water policies aimed at reducing the risk of lead exposure through drinking water.1 The states in the Federal Reserve Bank of Chicago’s Seventh District—Illinois, Indiana, Iowa, Michigan, and Wisconsin—are estimated to have over 2 million lead pipes, according to a September 2023 report to Congress by the U.S. Environmental Protection Agency’s (EPA) Office of Water; Illinois and Wisconsin rank among the top ten states with the most lead ...
Chicago Fed Insights

Identifying Information Gaps to Help Communities Navigate Lead Service Line Replacement

In response to state and federal policy changes, communities across the United States have been developing strategies to undertake the large-scale and complex process of replacing millions of lead service lines (LSLs). These lead pipes supply drinking water to homes and risk exposing households to lead, which can have long-term repercussions for a child’s development and cause chronic health issues in an adult. The challenge of replacing LSLs is felt acutely in the heart of the Midwest—home to the Federal Reserve Bank of Chicago’s Seventh District, which comprises all of Iowa and most ...
Chicago Fed Insights

FILTER BY year

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

G14 3 items

G18 3 items

G32 3 items

E43 2 items

E50 2 items

show more (23)

FILTER BY Keywords

COVID-19 3 items

Federal Reserve lending facilities 3 items

municipal debt 3 items

state and local governments 3 items

Bond Market 2 items

Government Bonds 2 items

show more (56)

PREVIOUS / NEXT