On regional borrowing, default, and migration

• 成果类型: Article
• 署名作者: Gordon, Grey; Guerron-Quintana, Pablo
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond; Boston College
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2024.103916
• 发表日期: 2024
• 关键词: MIGRATION; debt; default; bankruptcy; cities; Regional

摘要

How do local government borrowing, default, and migration interact? We find in -migration results in excessive debt accumulation due to a key externality: Immigrants help repay previously -issued debt. In addition to providing direct IV evidence on this mechanism, we show cities are heavily indebted, near state -imposed borrowing limits, vulnerable to interest rate increases, and default even after periods of robust population and productivity growth. Our quantitative model reproduces these features of the data and reveals a bifurcation: in -migration strongly affects borrowing, but borrowing only weakly affects migration. The model predicts large interest rate declines in the Great Recession prevented a wave of municipal defaults.