The most visible credit market measure of the fiscal health of a municipality is the credit rating. In this article we ask whether the credit rating fully incorporates the fiscal stresses faced by municipal governments. We utilize state "tax effort" as a measure of the fiscal stress faced by a...

Since 1979, yields on new issues of long-term municipal debt have risen sharply both absolutely and in relation to yields on long-term corporate and U.S. Treasury debt. In contrast, yields on short-term municipal debt have risen only moderately and offer a relative bargain. Consequently, there...

Pension data for local governments are generally unavailable. Hence, prior re­search has relied on pension ratios as proxies for underfunding. In this paper, we utilize data from Pennsylvania where local governments are required to report unfunded obligations on an actuarial basis to a state...

Municipal bond rating changes can have significant consequences for both borrowers and investors. Multivariate discriminant analysis (MDA) was used to examine whether financial ratios could discriminate between cities that had their ratings upgraded or downgraded from an A rating. In addition,...