Polluting Public Funds: The Effect of Environmental Regulations on Municipal Bonds

• 成果类型: Article; Early Access
• 署名作者: Jha, Akshaya; Karolyi, Stephen A.; Muller, Nicholas Z.
• 署名单位: Carnegie Mellon University; National Bureau of Economic Research; George Mason University; Carnegie Mellon University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.02340
• 发表日期: 2025
• 关键词: Air pollution; environmental policy; municipal bonds; ozone; Clean Air Act; National Ambient Air Quality Standards

摘要

We present two findings on how environmental policy uncertainty impacts municipal bond returns. First, yields increase after a new pollution standard is proposed but decrease after this standard is finalized. Second, after annual announcements of compliance status, yields fall for counties that remain in compliance but increase for newly noncompliant counties. We present suggestive evidence linking these short-run municipal bond market reactions to long-run changes in pollution and housing prices. Our findings suggest that increases in either regulatory stringency or uncertainty over future environmental policy increase the cost of municipal debt raised to fund schools, hospitals, and critical infrastructure.