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Abstract: 

Mosley points out that the paper fits nicely into a broader literature on the limits of market efficiency—in particular the evidence that the higher borrowing costs for more diverse areas have not been associated with higher default probabilities. Mosley highlights the fact that the paper appears to demonstrate the existence of some significant inefficiencies in municipal markets. He also comments on the importance, in empirical work like this, of making sure that alternative theories have been ruled out. Mosley notes that the authors include a large set of “control variables” to account for these alternative stories.

Keywords: Fractionalization, municipal bonds, borrowing cost, market efficiency

Affiliations:  1: Trident Municipal Research, LLC.