Opioid Crisis Effects on Municipal Finance

• 成果类型: Article
• 署名作者: Cornaggia, Kimberly; Hund, John; Nguyen, Giang; Ye, Zihan
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; University System of Georgia; University of Georgia; Nevada System of Higher Education (NSHE); University of Nevada Las Vegas
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab066
• 发表日期: 2022
• 页码: 2019
• 关键词: UNITED-STATES; heroin use; DRUG; prescription; COSTS; price; intermediation; mortality; ratings; MARKET

摘要

We investigate the effects of opioid abuse on municipal finance. We employ instrumental variables, border discontinuity difference-in-differences regressions, and coarsened exact matching to identify consistent causal effects, while controlling for variation in economic conditions and demographics. Opioid abuse lowers credit ratings, increases new offer yields, and reduces bond issuance. Reversal of these effects following effective antiopioid legislation further supports causality. Differential effects due to investor heterogeneity suggest that opioid abuse affects municipal finance through a capital supply channel. Overall, we conclude that local opioid abuse impedes municipalities' access to capital and thus hurts their ability to provide public services and infrastructure.