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Keywords:Municipal bonds 

Liquidity in U.S. fixed income markets: a comparison of the bid-ask spread in corporate, government and municipal bond markets

We examine the determinants of the realized bid-ask spread in the U.S. corporate, municipal and government bond markets for the years 1995 to 1997, based on newly available transactions data. Overall, we find that liquidity is an important determinant of the realized bid-ask spread in all three markets. Specifically, in all markets, the realized bid-ask spread decreases in the trading volume. Additionally, risk factors are important in the corporate and municipal markets. In these markets, the bid-ask spread increases in the remaining-time-to maturity of a bond. The corporate bond spread also ...
Staff Reports , Paper 73

Journal Article
The municipal bond market, Part I: politics, taxes, and yields

This article assesses recent changes in the structure of the municipal bond market. It reviews the tax legislation, judicial interpretations, and other factors that affect the yield on municipal bonds. These factors are then employed in a statistical analysis of the determinants of municipal bond yields. ; The results of the analysis show that the ratio of yield to maturity on municipal bonds to yields on U.S. Treasury bonds (the interest rate ratio) has varied greatly in the past two decades and is greater for longer maturities. They also show that debate during 1986 about tax reform ...
New England Economic Review , Issue Sep , Pages 13-36

Journal Article
Tax-free bonds

FRBSF Economic Letter

Journal Article
Municipal bond insurance reduces interest costs but raises leverage ratios

Economics Update , Issue Jan , Pages 3-4

Journal Article
The municipal bond market, part II: problems and policies

Why does Congress allow municipal interest payments to be exempted from federal income taxes in the face of a very large chronic deficit in the federal budget, even though no constitutional provision requires that this tax policy continue? The rhetoric of tax exemption is philosophical, appealing to notions of appropriate intergovernmental relations and, in particular, to the doctrine of reciprocal immunity: no level of government should use its taxing authority to impose harm on another level. ; But the true force behind tax exemption is that it provides states and local governments with a ...
New England Economic Review , Issue May , Pages 47-64

Working Paper
Prioritization in private-activity-bond volume cap allocation

This paper proposes and tests a structural model reflecting the process of authorizing private-activity municipal bond issuance. Private-activity municipal bonds offer tax-exempt financing for programs including industrial development, utilities, low-income housing, and student loans. The Federal tax code sets annual caps on the total tax-exempt issuance within each state, so authorization becomes a scarce resource distributed via a political process. Interviews with program administrators in several states suggested the authorization process involves prioritizing categories of use, ...
Working Papers (Old Series) , Paper 1110

Journal Article
Municipal bond behavior

FRBSF Economic Letter

Journal Article
The growth of the financial guarantee market

Quarterly Review , Volume 12 , Issue Spr , Pages 10-28

Working Paper
The determinants of commercial bank holdings of municipal securities: 1985-1988

This paper presents an empirical analysis of commercial bank holdings of municipal securities (munis) from June 1985 through December 1988, using the FFIEC's Reports of Condition and income. While motivated by previous analyses suggesting that a shift from munis to taxable securities is a primary determinant of the overall impact of the Tax Reform Act of 1986 on bank profitability, this paper does not directly analyze the impact of that legislation. However, the paper modifies the specification of muni demand employed in previous analyses to consider roles for state pledging requirements, ...
Working Papers (Old Series) , Paper 9001

Conference Paper
The effect of tax simplification on state and local governments

Conference Series ; [Proceedings] , Volume 29 , Pages 222-258


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