The opportunistic political cycle’s theories argued that the incumbent raises the visible expenses in the election time. The paper presents an alternative case that the public planning cycle impedes the incumbent to hike these expenditures. As a short-cut, the incumbent prefers to increase the grants to the voters, which can be comprehended as the vote-buying action. The paper tests the argument by using Indonesia local election and grants spending data from 2008 to 2013. Through treating the endogeneity of incumbency, the analysis results suggest that when the incumbent is participating in the election, the increase in these expenses are observed. Moreover, the hike of grant expenditures is mediated if the incumbent is in a loose electoral contest, where the political concentration is high. In the opposite, the grant expenditures increase to a greater extent if the incumbent participates in a tight election.
{"title":"How Much Is Your Vote? Opportunistic Business Cycles of Grant Expenditures in Indonesia’s Local Election","authors":"Tengku Munawar Chalil","doi":"10.2139/ssrn.3303074","DOIUrl":"https://doi.org/10.2139/ssrn.3303074","url":null,"abstract":"The opportunistic political cycle’s theories argued that the incumbent raises the visible expenses in the election time. The paper presents an alternative case that the public planning cycle impedes the incumbent to hike these expenditures. As a short-cut, the incumbent prefers to increase the grants to the voters, which can be comprehended as the vote-buying action. The paper tests the argument by using Indonesia local election and grants spending data from 2008 to 2013. Through treating the endogeneity of incumbency, the analysis results suggest that when the incumbent is participating in the election, the increase in these expenses are observed. Moreover, the hike of grant expenditures is mediated if the incumbent is in a loose electoral contest, where the political concentration is high. In the opposite, the grant expenditures increase to a greater extent if the incumbent participates in a tight election.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128886262","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Decentralization had been a common public finance reform among developing countries in the past few decades. Some advocates pushed for decentralization reform as an answer to the growing problem of income inequality. The primary argument for decentralization was that sub-national governments had better information on the needs and preferences of local citizens; while the primary argument against it was that the central government had better economies of scale in delivering public services, and usually had better access to important resources. This study tested for the relationship between decentralization and income inequality using both panel data and an annual averaged cross-section data of countries with varying income levels. The results showed that revenue decentralization and fiscal independence were weakly associated with lower income inequality, while expenditure decentralization had no significant relationship with inequality. In addition, the relationship appeared only in the panel data analysis, i.e. when short-term yearly fluctuations in data was not controlled for.
{"title":"Decentralization and Income Inequality in a Panel and Cross-Section of Countries","authors":"Tristan Canare, J. P. Francisco, R. A. C. Caliso","doi":"10.2139/ssrn.3452512","DOIUrl":"https://doi.org/10.2139/ssrn.3452512","url":null,"abstract":"Decentralization had been a common public finance reform among developing countries in the past few decades. Some advocates pushed for decentralization reform as an answer to the growing problem of income inequality. The primary argument for decentralization was that sub-national governments had better information on the needs and preferences of local citizens; while the primary argument against it was that the central government had better economies of scale in delivering public services, and usually had better access to important resources. This study tested for the relationship between decentralization and income inequality using both panel data and an annual averaged cross-section data of countries with varying income levels. The results showed that revenue decentralization and fiscal independence were weakly associated with lower income inequality, while expenditure decentralization had no significant relationship with inequality. In addition, the relationship appeared only in the panel data analysis, i.e. when short-term yearly fluctuations in data was not controlled for.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"165 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121277632","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
According to the 2018 year-end data, the regional consolidated budgets and local government off-budget funds’ budgets ran a surplus of RUB 512.9 billion or 0.49 percent of GDP. To compare, the regional consolidated budgets and local government off-budget funds’ budgets ran a deficit of RUB 61.5 billion or 0.07 percent of GDP in 2017. In 2018, the budgets of subjects of the Russian Federation ran a surplus of RUB 491.5 billion, urban districts’ budgets ran a deficit of RUB 0.8 billion, federal-status cities’ inner-city municipalities’ budgets ran a surplus of RUB 0.4 billion, municipal areas’ budgets ran a surplus of RUB 16.0 billion, urban and rural settlements’ budgets ran a surplus of RUB 3.5 billion, local government off-budget funds’ budgets ran a surplus of RUB 2.7 billion.
{"title":"Russia’s Municipal and Sub-Federal Debt Market in 2018","authors":"A. Shadrin","doi":"10.2139/ssrn.3448614","DOIUrl":"https://doi.org/10.2139/ssrn.3448614","url":null,"abstract":"According to the 2018 year-end data, the regional consolidated budgets and local government off-budget funds’ budgets ran a surplus of RUB 512.9 billion or 0.49 percent of GDP. To compare, the regional consolidated budgets and local government off-budget funds’ budgets ran a deficit of RUB 61.5 billion or 0.07 percent of GDP in 2017. In 2018, the budgets of subjects of the Russian Federation ran a surplus of RUB 491.5 billion, urban districts’ budgets ran a deficit of RUB 0.8 billion, federal-status cities’ inner-city municipalities’ budgets ran a surplus of RUB 0.4 billion, municipal areas’ budgets ran a surplus of RUB 16.0 billion, urban and rural settlements’ budgets ran a surplus of RUB 3.5 billion, local government off-budget funds’ budgets ran a surplus of RUB 2.7 billion.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125406044","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
French Abstract: Cette chronique revient sur différents arrêts de la Cour administrative en matière fiscale depuis janvier 2019. La chronique s'attarde plus particulièrement sur la jurisprudence relative à l’échange de renseignements sur demande et évoque notamment, les recours préjudiciels introduits par la Cour administrative auprès de la CJUE. La chronique s’intéresse également à deux autres arrêts de la Cour administrative portant sur les conditions de qualification continue de bénéfice commercial et sur les situations d’invocabilité d’une réclamation orale introduite auprès de l'Administration des Contributions directes.
English Abstract: This chronicle summarizes various decisions rendered by the Luxembourg Supreme Administrative court in the field of direct taxation since January 2019. It emphasizes the development of its case-law in exchange of information matters and addresses more particularly the three preliminary rulings introduced before the CJEU. This contribution also discusses two additional cases relating to the continuous qualification of commercial profits and the conditions one must fulfill to enforce an oral appeal introduced before the Luxembourg direct tax administration.
{"title":"Chronique de jurisprudence administrative en matière fiscale 2019/1 (Case-law review in the field of direct taxes - Luxembourg 2019)","authors":"F. Chaouche","doi":"10.2139/ssrn.3496778","DOIUrl":"https://doi.org/10.2139/ssrn.3496778","url":null,"abstract":"<b>French Abstract:</b> Cette chronique revient sur différents arrêts de la Cour administrative en matière fiscale depuis janvier 2019. La chronique s'attarde plus particulièrement sur la jurisprudence relative à l’échange de renseignements sur demande et évoque notamment, les recours préjudiciels introduits par la Cour administrative auprès de la CJUE. La chronique s’intéresse également à deux autres arrêts de la Cour administrative portant sur les conditions de qualification continue de bénéfice commercial et sur les situations d’invocabilité d’une réclamation orale introduite auprès de l'Administration des Contributions directes. <br><br><b>English Abstract:</b> This chronicle summarizes various decisions rendered by the Luxembourg Supreme Administrative court in the field of direct taxation since January 2019. It emphasizes the development of its case-law in exchange of information matters and addresses more particularly the three preliminary rulings introduced before the CJEU. This contribution also discusses two additional cases relating to the continuous qualification of commercial profits and the conditions one must fulfill to enforce an oral appeal introduced before the Luxembourg direct tax administration.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133749745","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Local governments are opaque and, due to asymmetric information, face credit rationing. Bond insurance alleviates this problem by shifting the burden of information production from investors to insurers. The value of bond insurance lies in its ability to grant governments access to the municipal bond market. More opaque governments buy more bond insurance and have more persistent insurance relationships, highlighting the role of information frictions. During the Global Financial Crisis, governments associated with ailing insurers issued less debt, cut expenditures, and hired fewer workers. These effects are concentrated among opaque governments and persisted for many years because these governments remain excluded from the municipal bond market. Partial equilibrium calculations show that affected governments' aggregate expenditures and employment levels in 2017 would have been 6% to 10% higher, if bond insurance had remained available.
{"title":"Bond Insurance and Public Sector Employment","authors":"Natee Amornsiripanitch","doi":"10.2139/ssrn.3432636","DOIUrl":"https://doi.org/10.2139/ssrn.3432636","url":null,"abstract":"Local governments are opaque and, due to asymmetric information, face credit rationing. Bond insurance alleviates this problem by shifting the burden of information production from investors to insurers. The value of bond insurance lies in its ability to grant governments access to the municipal bond market. More opaque governments buy more bond insurance and have more persistent insurance relationships, highlighting the role of information frictions. During the Global Financial Crisis, governments associated with ailing insurers issued less debt, cut expenditures, and hired fewer workers. These effects are concentrated among opaque governments and persisted for many years because these governments remain excluded from the municipal bond market. Partial equilibrium calculations show that affected governments' aggregate expenditures and employment levels in 2017 would have been 6% to 10% higher, if bond insurance had remained available.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"106 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128083588","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Thomas J. Kane, Angela Boatman, Whitney Kozakowski, C. J. Bennett, Rachel Hitch, Dana Weisenfeld
Many U.S. students arrive on college campus lacking the skills expected for college-level work. As state leaders seek to increase postsecondary enrollment and completion, public colleges have sought to lessen the delays created by remedial course requirements. Tennessee has taken a novel approach by allowing students to complete their remediation requirements in high school. Using both a difference-in-differences and a regression discontinuity design, we evaluate the program’s impact on college enrollment and credit accumulation, finding that the program boosted enrollment in college-level math during the first year of college and allowed students to earn a modest 4.5 additional college credits by their second year. We also report the first causal evidence on remediation's impact on students' math skills, finding that the program did not improve students’ math achievement, nor boost students’ chances of passing college math. Our findings cast doubt on the effectiveness of the current model of remediation—whether in high school or college—in improving students’ math skills. They also suggest that the time cost of remediation—whether pre-requisite or co-requisite remediation—is not the primary barrier causing low degree completion for students with weak math preparation.
{"title":"College Remediation Goes Back to High School: Evidence from a Statewide Program in Tennessee","authors":"Thomas J. Kane, Angela Boatman, Whitney Kozakowski, C. J. Bennett, Rachel Hitch, Dana Weisenfeld","doi":"10.3386/W26133","DOIUrl":"https://doi.org/10.3386/W26133","url":null,"abstract":"Many U.S. students arrive on college campus lacking the skills expected for college-level work. As state leaders seek to increase postsecondary enrollment and completion, public colleges have sought to lessen the delays created by remedial course requirements. Tennessee has taken a novel approach by allowing students to complete their remediation requirements in high school. Using both a difference-in-differences and a regression discontinuity design, we evaluate the program’s impact on college enrollment and credit accumulation, finding that the program boosted enrollment in college-level math during the first year of college and allowed students to earn a modest 4.5 additional college credits by their second year. We also report the first causal evidence on remediation's impact on students' math skills, finding that the program did not improve students’ math achievement, nor boost students’ chances of passing college math. Our findings cast doubt on the effectiveness of the current model of remediation—whether in high school or college—in improving students’ math skills. They also suggest that the time cost of remediation—whether pre-requisite or co-requisite remediation—is not the primary barrier causing low degree completion for students with weak math preparation.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133396823","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To answer the question posed in our title, we first review how corporate income taxes are shared in federal countries, EU efforts to harmonize corporate taxes, and previous experience with attempts at ‘global’ taxation. In all cases, the main lessons that emerge are that it takes much time and effort to reach any agreement and that any feasible solution is most unlikely to require much if any redistribution across jurisdictions. In the absence of any agreed global governance structure, the only way to build a better international tax system is through voluntary cooperation. We consider some of the elements such as transparency, inclusivity, and perceived fairness that appear essential to creating such an international alliance. To make much progress in this direction the most feasible approach is likely to start small, allowing countries considerable leeway to do things ‘their way’ to the extent possible while moving towards a common tax framework that may perhaps, over time, provide a basis for more ambitious measures.
{"title":"International Tax Sharing: Can the Dream become Reality?","authors":"R. Bird, J. Mintz","doi":"10.2139/ssrn.3426848","DOIUrl":"https://doi.org/10.2139/ssrn.3426848","url":null,"abstract":"To answer the question posed in our title, we first review how corporate income taxes are shared in federal countries, EU efforts to harmonize corporate taxes, and previous experience with attempts at ‘global’ taxation. In all cases, the main lessons that emerge are that it takes much time and effort to reach any agreement and that any feasible solution is most unlikely to require much if any redistribution across jurisdictions. In the absence of any agreed global governance structure, the only way to build a better international tax system is through voluntary cooperation. We consider some of the elements such as transparency, inclusivity, and perceived fairness that appear essential to creating such an international alliance. To make much progress in this direction the most feasible approach is likely to start small, allowing countries considerable leeway to do things ‘their way’ to the extent possible while moving towards a common tax framework that may perhaps, over time, provide a basis for more ambitious measures.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129874583","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-07-03DOI: 10.1017/9781108658867.027
Erin C Fuse Brown, Jaime S. King
To improve health care market dynamics and reduce costs, many states have passed legislation to improve transparency in health care for consumers, regulators, and employers. Significant state-led initiatives include building price transparency tools using data from state all-payer claims databases (APCDs), requiring pharmacy benefit managers to report drug markups and pricing methodologies, increasing provider network transparency, and limiting surprise medical bills from out-of-network providers. Despite robust and salutary state innovation in consumer health care transparency, the federal Employee Retirement Income Security Act’s (ERISA) growing preemptive sweep prevents these state laws from benefiting a growing percentage health care consumers — those covered by self-funded employee health plans. In Gobeille v. Liberty Mutual, the Supreme Court dramatically broadened ERISA’s preemptive reach over state laws imposing data reporting requirements on self-funded plans. The expanding scope of ERISA preemption fundamentally limits the ability of states to protect their citizen-consumers and oversee rising health care costs through health care transparency laws. For transparency initiatives to achieve their maximal effect at the state level, lawmakers must make changes at the federal level. A federal solution could take many forms, ranging from narrow-issue administrative rulemaking to amending ERISA to exempt state transparency laws from preemption. Although federal policy may be necessary for health care transparency efforts to reach all consumers, such a policy should preserve state flexibility and innovation.
{"title":"ERISA as a Barrier for State Health Care Transparency Efforts","authors":"Erin C Fuse Brown, Jaime S. King","doi":"10.1017/9781108658867.027","DOIUrl":"https://doi.org/10.1017/9781108658867.027","url":null,"abstract":"To improve health care market dynamics and reduce costs, many states have passed legislation to improve transparency in health care for consumers, regulators, and employers. Significant state-led initiatives include building price transparency tools using data from state all-payer claims databases (APCDs), requiring pharmacy benefit managers to report drug markups and pricing methodologies, increasing provider network transparency, and limiting surprise medical bills from out-of-network providers. Despite robust and salutary state innovation in consumer health care transparency, the federal Employee Retirement Income Security Act’s (ERISA) growing preemptive sweep prevents these state laws from benefiting a growing percentage health care consumers — those covered by self-funded employee health plans. In Gobeille v. Liberty Mutual, the Supreme Court dramatically broadened ERISA’s preemptive reach over state laws imposing data reporting requirements on self-funded plans. The expanding scope of ERISA preemption fundamentally limits the ability of states to protect their citizen-consumers and oversee rising health care costs through health care transparency laws. For transparency initiatives to achieve their maximal effect at the state level, lawmakers must make changes at the federal level. A federal solution could take many forms, ranging from narrow-issue administrative rulemaking to amending ERISA to exempt state transparency laws from preemption. Although federal policy may be necessary for health care transparency efforts to reach all consumers, such a policy should preserve state flexibility and innovation.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122629926","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate whether the financial conditions of insurance companies, an important group of investors in the market, can affect the municipal bond spreads. Using Hurricane Sandy as an exogenous shock to the financial conditions of insurers, we find that even not directly affected by Sandy, the municipal bonds held by Sandy-shocked insurers experience a widening of spreads during the event, compared to bonds not held by shocked insurers. Thus the Sandy case highlights the unexpected spillover effect of the natural disasters from Sandy-shock bonds to non-shocked bonds through the common ownership by Sandy-shocked insurers. The widening of spreads is caused by the actual sale and the potential sale pressure by the shocked insurers during Sandy, as we find that the increase in spreads also exists in bonds which are not actually sold by the shocked insurers, suggesting the effect of potential selling risk: investors’ financial conditions can affect pricing even though they are not engaging in trading. In a more general setting, we continue to find that weak financial conditions are related to higher bond spreads, which become even stronger during the Lehman crisis. We document that the increase in bond spreads is mainly driven by the increase in bond liquidity spreads. We further show that investor’s financial conditions affect the liquidity spreads by affecting the level of liquidity and liquidity commonality.
{"title":"Investors’ Financial Conditions and Municipal Bond Pricing","authors":"Tao Chen, Shinichi Kamiya, Pingyi Lou","doi":"10.2139/ssrn.3416974","DOIUrl":"https://doi.org/10.2139/ssrn.3416974","url":null,"abstract":"We investigate whether the financial conditions of insurance companies, an important group of investors in the market, can affect the municipal bond spreads. Using Hurricane Sandy as an exogenous shock to the financial conditions of insurers, we find that even not directly affected by Sandy, the municipal bonds held by Sandy-shocked insurers experience a widening of spreads during the event, compared to bonds not held by shocked insurers. Thus the Sandy case highlights the unexpected spillover effect of the natural disasters from Sandy-shock bonds to non-shocked bonds through the common ownership by Sandy-shocked insurers. The widening of spreads is caused by the actual sale and the potential sale pressure by the shocked insurers during Sandy, as we find that the increase in spreads also exists in bonds which are not actually sold by the shocked insurers, suggesting the effect of potential selling risk: investors’ financial conditions can affect pricing even though they are not engaging in trading. In a more general setting, we continue to find that weak financial conditions are related to higher bond spreads, which become even stronger during the Lehman crisis. We document that the increase in bond spreads is mainly driven by the increase in bond liquidity spreads. We further show that investor’s financial conditions affect the liquidity spreads by affecting the level of liquidity and liquidity commonality.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127932122","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines how newspaper reporting affects government bond prices during the U.S. state default of the 1840s. Using unsupervised machine learning algorithms, the paper first constructs novel ``fiscal information indices'' for state governments based on U.S. newspapers at the time. The impact of the indices on government bond prices varied over time. Before the crisis, the entry of new western states into the bond market spurred competition: more state-specific fiscal news imposed downward pressure on bond prices for established states in the market. During the crisis, more state-specific fiscal information increased (lowered) bond prices for states with sound (unsound) fiscal policy.
{"title":"Sovereign Risk and Fiscal Information: A Look at the U.S. State Default of the 1840s","authors":"Huixin Bi, Nora Traum","doi":"10.2139/ssrn.3409429","DOIUrl":"https://doi.org/10.2139/ssrn.3409429","url":null,"abstract":"This paper examines how newspaper reporting affects government bond prices during the U.S. state default of the 1840s. Using unsupervised machine learning algorithms, the paper first constructs novel ``fiscal information indices'' for state governments based on U.S. newspapers at the time. The impact of the indices on government bond prices varied over time. Before the crisis, the entry of new western states into the bond market spurred competition: more state-specific fiscal news imposed downward pressure on bond prices for established states in the market. During the crisis, more state-specific fiscal information increased (lowered) bond prices for states with sound (unsound) fiscal policy.","PeriodicalId":221919,"journal":{"name":"ERN: National","volume":"85 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123983548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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