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Author:  W. Bartley Hildreth.


Source: Volume 31, Number 04, Winter 2011 , pp.1-92(92)




Municipal Finance Journal

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Abstract: 

This issue of MFJ highlights the diversification of research pertaining to municipal securities and the credit conditions of the issuers of those instruments. Finance professors Patrick Cusatis and Oranee Tawatnuntachai address the seasonality of municipal bond funds and the municipal market. In addition to finding early evidence for the January effect, the paper finds recent evidence of negative returns in March. A combination of increased supply and decreased demand is posited as the cause of the March effect in the municipal market. Debt issuance involves a network of participants, including key issuer officials, the underwriter (or syndicate), one or more bond lawyers, and a financial advisor, among others, usually working out of the limelight to accomplish a transaction. Public affairs professors Gerald J. Miller and Jonathan B. Justice scrutinize the principles embedded in debt restructuring networks. They offer recommendations for dealing with the ambiguity of these norms. Diversifying the revenue portfolio is advanced as a way to stabilize state finances through a broader base of taxation. Public affairs professor Wenli Yan examines how revenue diversification influences a state’s credit rating through its interaction with the corresponding regional economy. Results confirm the influence of the underlying economy. A related concern is the underlying ability of local governments to gain from an option to impose various revenue sources. Senior economist Bo Zhao evaluates the extent to which new local-option taxes boost the revenue-raising capacity of local governments in Massachusetts and how this revenue capacity varies with local conditions. Results are used to discuss the design of state aid formulas.

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Affiliations:  1: Editor.

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