U.S. municipal yields and unfunded state pension liabilities

Z. Lekniute; R.M.W.J. Beetsma; Eduard Ponds

doi:10.1016/j.jempfin.2019.05.003

U.S. municipal yields and unfunded state pension liabilities

Z. Lekniute
, R.M.W.J. Beetsma
, Eduard Ponds

Research output: Contribution to journal › Article › Scientific › peer-review

2 Citations (Scopus)

Abstract

We present empirical evidence that municipal bond yields are increasing in both the explicit debt and the unfunded pension liabilities of U.S. state civil servants. However, the positive yield effects of both types of debt are found only for the period since the start of the global financial crisis. A potential explanation is that the crisis triggered awareness of budgetary sustainability. Further, the marginal yield effect of higher pension debt is significantly smaller than that of higher explicit debt.

Original language	English
Pages (from-to)	15-32
Journal	Journal of Empirical Finance
Volume	53
DOIs	https://doi.org/10.1016/j.jempfin.2019.05.003
Publication status	Published - Sept 2019

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 10 Reduced Inequalities

Keywords

civil servants pension funds
undefunding
explicit debt
implicit debt
municipal yields
unfunded pension liabilities
market values
actuarial values

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10.1016/j.jempfin.2019.05.003

Cite this

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title = "U.S. municipal yields and unfunded state pension liabilities",

abstract = "We present empirical evidence that municipal bond yields are increasing in both the explicit debt and the unfunded pension liabilities of U.S. state civil servants. However, the positive yield effects of both types of debt are found only for the period since the start of the global financial crisis. A potential explanation is that the crisis triggered awareness of budgetary sustainability. Further, the marginal yield effect of higher pension debt is significantly smaller than that of higher explicit debt.",

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AU - Ponds, Eduard

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N2 - We present empirical evidence that municipal bond yields are increasing in both the explicit debt and the unfunded pension liabilities of U.S. state civil servants. However, the positive yield effects of both types of debt are found only for the period since the start of the global financial crisis. A potential explanation is that the crisis triggered awareness of budgetary sustainability. Further, the marginal yield effect of higher pension debt is significantly smaller than that of higher explicit debt.

AB - We present empirical evidence that municipal bond yields are increasing in both the explicit debt and the unfunded pension liabilities of U.S. state civil servants. However, the positive yield effects of both types of debt are found only for the period since the start of the global financial crisis. A potential explanation is that the crisis triggered awareness of budgetary sustainability. Further, the marginal yield effect of higher pension debt is significantly smaller than that of higher explicit debt.

KW - civil servants pension funds

KW - undefunding

KW - explicit debt

KW - implicit debt

KW - municipal yields

KW - unfunded pension liabilities

KW - market values

KW - actuarial values

U2 - 10.1016/j.jempfin.2019.05.003

DO - 10.1016/j.jempfin.2019.05.003

M3 - Article

SN - 0927-5398

VL - 53

SP - 15

EP - 32

JO - Journal of Empirical Finance

JF - Journal of Empirical Finance

ER -

U.S. municipal yields and unfunded state pension liabilities

Abstract

UN SDGs

Keywords

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