I examine how liquidity risk affects municipal bond pricing. Liquidity has become a central concern to municipal bond investors, issuers, and regulators since the recent collapse of the monoline municipal bond insurers. The results show that liquidity risk had a minimal effect on yield spreads...

After achieving peak revenue of $1.5 billion in 2007, the municipal bond insurance business collapsed in the wake of the financial crisis. More recently, the industry has started to recover, with three market participants seeking to write new policies. Our study asks whether municipal bond...

The alarming rise in drinking water pollution across the U.S. is often attributed to cost cutting pressures faced by local officials. We know little, however, about why these pressures are so severe for some cities compared to others. We present a new theory to argue that an important...