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The municipal bond market, Part I: politics, taxes, and yields

Author

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  • Peter Fortune

Abstract

This article assesses recent changes in the structure of the municipal bond market. It reviews the tax legislation, judicial interpretations, and other factors that affect the yield on municipal bonds. These factors are then employed in a statistical analysis of the determinants of municipal bond yields. ; The results of the analysis show that the ratio of yield to maturity on municipal bonds to yields on U.S. Treasury bonds (the interest rate ratio) has varied greatly in the past two decades and is greater for longer maturities. They also show that debate during 1986 about tax reform increased interest rate ratios, suggesting independent evidence for the importance of anticipated future tax rates.

Suggested Citation

  • Peter Fortune, 1991. "The municipal bond market, Part I: politics, taxes, and yields," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 13-36.
    • Handle: RePEc:fip:fedbne:y:1991:i:sep:p:13-36
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    File URL: http://www.bostonfed.org/economic/neer/neer1991/neer591b.pdf
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    Cited by:

    1. Peter Fortune, 1997. "Mutual funds, part I: reshaping the American financial system," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 45-72.
    2. Robert K. Triest, 1997. "Regional differences in family poverty," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-17.
    3. Daniel Garrett & Andrey Ordin & James W Roberts & Juan Carlos Suárez Serrato, 2023. "Tax Advantages and Imperfect Competition in Auctions for Municipal Bonds," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 815-851.
    4. Robert Brooks, 2005. "A Surplus Optimization Approach to Managing Municipal Debt," Public Finance Review, , vol. 33(2), pages 236-254, March.
    5. John R. Walter, 1998. "Short-term municipal securities," Monograph, Federal Reserve Bank of Richmond, number 1998tm:x:1.

    More about this item

    Keywords

    Municipal bonds;

    Statistics

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