Based on the indirect arbitrage opportunities afforded citizens by tax-exempt debt issue, this article presents a model establishing equilibrium in the market for tax-exempt debt. The model yields two predictions. Increases in Federal income tax rates increase the spread between taxable and...

In this paper we leverage a national panel of US municipalities to show that a pair of heuristics identified from the behavioral economics literature, anchoring and the bandwagon effect, help to explain the number of years of expenses municipalities hold in reserve. We build our empirical case...

Minimum wage hikes express our sympathy for the working poor and our solidarity with them. But their importance is largely symbolic. The net effects of moderate increases in wage floors are vanishingly small. Statutory wage minimums work like taxes on labor, with their proceeds paid directly to...

This article evaluates two alternative standards for resetting property assessments on title transfer in property tax systems like Oregon's and California's, which are explicitly designed to protect property owners against rapid, unanticipated increases in their tax bills: California's reset to...

We find that, for many categories of taxes, states that have upgraded their tax-processing systems see statistically and economically significant increases in collections relative to states that have not. Specifically, we detect positive impacts for amusement taxes, tobacco taxes, motor vehicle...

It is puzzling that the single most important explanatory variable for municipal reserves is the state in which a municipality is located. In this paper we leverage a broad panel of US municipalities to show that a pair of behavioral heuristics: anchoring and the bandwagon effect, are an...

An age-old issue is how inquiry and action can reciprocally contribute to transforming existing into preferred conditions. Leading scholars of a recent generation repeatedly addressed this general issue in human affairs. Herbert Simon's major proposal was to develop design-oriented sciences or,...

This article raises several issues regarding the valuation and disclosure of pension commitments, quasi-commitments, and guarantees. We all know that the annual process of budgetary decision-making is prone to myopia and to tunnel vision. The long-term consequences of fiscal commitments are...

In recent years, scholars have developed new analytical tools and financial instruments that could help governments cope more effectively with financial volatility. In this essay we show how states can achieve fiscal sustainability using financial instruments based upon mean-variance analysis:...

In recent years, scholars have developed new analytical tools and financial instruments that could help governments cope more effectively with financial volatility. In this essay we show how states can achieve fiscal sustainability using financial instruments based upon mean-variance analysis:...