{"title":"On regional borrowing, default, and migration","authors":"Grey Gordon , Pablo Guerron-Quintana","doi":"10.1016/j.jinteco.2024.103916","DOIUrl":null,"url":null,"abstract":"<div><p>How do local government borrowing, default, and migration interact? We find in-migration results in excessive debt accumulation due to a key externality: Immigrants help repay previously-issued debt. In addition to providing direct IV evidence on this mechanism, we show cities are heavily indebted, near state-imposed borrowing limits, vulnerable to interest rate increases, and default even after periods of robust population and productivity growth. Our quantitative model reproduces these features of the data and reveals a bifurcation: in-migration strongly affects borrowing, but borrowing only weakly affects migration. The model predicts large interest rate declines in the Great Recession prevented a wave of municipal defaults.</p></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"150 ","pages":"Article 103916"},"PeriodicalIF":3.8000,"publicationDate":"2024-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0022199624000400","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
How do local government borrowing, default, and migration interact? We find in-migration results in excessive debt accumulation due to a key externality: Immigrants help repay previously-issued debt. In addition to providing direct IV evidence on this mechanism, we show cities are heavily indebted, near state-imposed borrowing limits, vulnerable to interest rate increases, and default even after periods of robust population and productivity growth. Our quantitative model reproduces these features of the data and reveals a bifurcation: in-migration strongly affects borrowing, but borrowing only weakly affects migration. The model predicts large interest rate declines in the Great Recession prevented a wave of municipal defaults.
地方政府借贷、违约和移民是如何相互作用的？我们发现，由于一个关键的外部效应，移民会导致债务过度积累：移民会帮助偿还之前发行的债务。除了为这一机制提供直接的 IV 证据外，我们还表明城市负债累累，接近国家规定的借贷限额，易受利率上升的影响，即使在人口和生产率强劲增长时期也会违约。我们的定量模型再现了数据的这些特征，并揭示了一个分叉：人口迁入对借贷的影响很大，但借贷对人口迁入的影响很小。该模型预测，大衰退时期利率的大幅下降阻止了市政违约潮的出现。
期刊介绍：
The Journal of International Economics is intended to serve as the primary outlet for theoretical and empirical research in all areas of international economics. These include, but are not limited to the following: trade patterns, commercial policy; international institutions; exchange rates; open economy macroeconomics; international finance; international factor mobility. The Journal especially encourages the submission of articles which are empirical in nature, or deal with issues of open economy macroeconomics and international finance. Theoretical work submitted to the Journal should be original in its motivation or modelling structure. Empirical analysis should be based on a theoretical framework, and should be capable of replication.
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