Next up, June Huang (UT-Dallas) talk about voter referenda for municipal bonds. This is a fascinating paper we also had at the virtual muni finance workshop this spring. One of the punchlines: municipalities go far out of their way to avoid holding referenda

Here’s an example if it’s legible. Tender refunding transaction where savings were only 57% of the lost option value even if you ignore transaction costs.

It wouldn’t be a Brookings muni conference without Andy Kalotay (Kalotay Associates) here to tell us about the valuation and exercise of call options. 5% coupon bonds callable at 10 years are extremely common munis, but they are much more expensive than people realize because of option value…

Muni and other fixed income ETFs often don’t have an active AP, and shorting bonds (especially munis for tax reasons) is hard which makes market making costly. So NAV vs market price misalignment is common. How should we tell which is more right and which should adjust?

Back from lunch! Yu He (UNL) is kicking off the afternoon with a paper about muni ETFs and their outcomes during COVID. Paper suggests big success: most selling pressure stayed in the ETF layer and didn’t spill over into the rest of the market.

Michael Eriksen kicks off the discussion: housing affordability is a real problem. Rent rises are large, homelessness is at the highest point on record. The share of income going to rent has gotten large, even in the middle of the country. Argues 94% increase all-in home purchase cost 2019-2026

Next paper! Viet-Dung Doan (HKBU) is telling us about “The Fragility Tax” and integration on risks in equity and municipal bond markets

The paper has a nice example of what smithereening looks like in the wild:

It’s Day #1 for f the 15th Brookings Municipal finance conference!!! I’ll be sharing papers and brief thoughts here, but livestream and papers are at www.brookings.edu/events/15th-... Starting now, Casey Dougal (FSU) is going to tell us about “smithereening”

The Thaddeus Stevens appreciators around this site might like to know there’s a new museum opening in the building that was his old law office in Lancaster, PA, this weekend.

The next Virtual Municipal Finance Workshop is tomorrow, 3/18, at 11am EST! June Huang of UT-Dallas will present "Debt by Democracy: Bond Referendum Requirements and Municipal Borrowing" with Kimmie Munevar at Texas A&M + Delphine Samuels at INSEAD Paper and zoom: www.muni-workshop.com/schedule

The next installment of the Virtual Municipal Finance Workshop is tomorrow, 3/4, at 11am EST! Riddha Basu (GWU) will present "The Darkside of Dissemination: Evidence from the Provision of Municipal Credit Ratings" with Xiangpei Chen and Jim Naughton. Paper and zoom: www.muni-workshop.com/schedule

The Virtual Municipal Finance Workshop is starting tomorrow, Wednesday 2/18, at 11am EST! The first presentation will be "Dealer Specialization and Market Segmentation" by Chotibhak Jotikasthira (SMU), Christian Lundblad (UNC), and Jinming Xue (SMU) Paper and Zoom: www.muni-workshop.com/schedule

I have been thinking this year will be a particularly rough year for economists seeking employment, and this new data tool from the AEA definitely shows that is the case with 1/3 less listings than the same time last year, basically matching COVID lows.

Happy Caturday from Big Gus and Archie who like to politely join me at the kitchen counter for an afternoon snack.

The basic idea: hurricane Sandy had a massive deleterious effect on property values in NYC for damaged properties, but property tax assessments adjust these values down for property taxes less, leading to increases in the taxable ratio (especially damaged properties ineligible for tax relief)

But wildfires cause more than just direct damage! Luis Lopez (UIC) presents “Up in Smoke: The Impact of Wildfire Pollution on Healthcare Municipal Finance” documenting that the smoke from wildfires is priced in the bonds of hospitals and nursing homes (more negative profitability services)

After congestion pricing, back to muni bonds. Woongchan Jeon presented “Pricing Climate Risks: Evidence from Wildfires and Municipal Bonds” arguing that wildfire risks are being increasingly price over time (following the Goldsmith-Pinkham et al. sea level rise paper)

Chaowang Ren just presented a new paper testing out a bunch of models for predicting municipal financial distress. There is some compelling evidence that certain machine learning methods can improve distress predictions.

Now time for the really fun stuff: muni transaction costs! Simon Wu of the MSRB describes how trade data show effective spreads declining dramatically over time (discussed by Brad Wendt). Lot of discussion about the pattern in the room. Many proposed reasons (ATS, SMAs, reporting, etc)

Next up, Louise Sheiner of Brookings argues that college educated workers in the state and local sector have had cash wage declines on average and benefits (pensions, healthcare, stability) have not offset this decline in “Do State and Local Governments Offer Competitive Compensation?”

Huaizhi Chen kicks the day off with “Assessing Assessors” arguing that local property tax assessors have a lot (maybe too much) flexibility in assigning assessments, local deficits predicting assessment changes over time, disjoint from market prices

The Brookings Municipal Finance Conference is today (available livestream: www.brookings.edu/events/14th-...) and the lineup of papers is excellent! I’m not much of a live tweeter but I’ll try to share a few highlights

56 miles with my dad for his 56th birthday (only 15 or so years after the fact) It turns out that was a hard ride for both of us in this heat

Just a couple of proud American cats who do not recognize the authority of any king. #nokingsonlycats

The Virtual Municipal Finance Workshop meets TOMORROW, 4/30, at 11am EDT! Our presentations will be by Hala Moussawi (Stanford) and Renping Li (WUSTL) covering topics in municipal finance and taxation and competition. Papers and Zoom link: www.muni-workshop.com

The Virtual Municipal Finance Workshop meets TOMORROW, 4/16, at 11am EDT! Our presentations will be by Viral Acharya (NYU) and Tuomas Tomunen (Boston College) covering topics in municipal finance and the environment. Papers and Zoom link: www.muni-workshop.com

The Virtual Municipal Finance Workshop meets TODAY, 4/2, at 11am EDT! Our presentations will be by Ryan Israelsen (Michigan State University) and Kyle Zimmerschied (University of Missouri) covering topics in municipal finance and immigration. Papers and Zoom link: muni-workshop.com

The Virtual Municipal Finance Workshop meets this Wednesday, 3/19, at 11am EST! Our presentations will be by Federico Mainardi (University of Chicago) and Michael Varley (University of Kentucky) covering topics in municipal finance and the macroeconomy. Papers and Zoom link: www.muni-workshop.com

The Virtual Municipal Finance Workshop meets this Wednesday, 3/5, at 11am EST! Our presentations will be by Casey Dougal (FSU) and Bingkuan (Bryan) Cao (UNL) covering topics in stakeholder relationships in municipal finance. Papers and Zoom link: www.muni-workshop.com