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The Role of Federal Taxation in the Supply of Municipal Bonds: Evidence From Municipal Governments / Gilbert E. Metcalf.
- Format:
- Book
- Author/Creator:
- Metcalf, Gilbert E.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w3891.
- NBER working paper series no. w3891
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Role of Federal Taxation in the Supply of Municipal Bonds
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1991.
- Summary:
- This paper considers ways in which federal tax policy affects municipal asset and debt holdings. The tax treatment of municipal bonds and income creates an arbitrage opportunity for communities to issue tax exempt debt and invest in financial assets. I present evidence that suggests the rules in effect prior to 1986 to prevent this activity were not effective. I then develop and estimate a model of municipal bond supply. I find a semi-elasticity of 1.23 of long term debt with respect to the spread between the after tax rate of return and the municipal borrowing rate.
- Notes:
- Print version record
- November 1991.
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