@article{THESIS,
      recid = {2319},
      author = {Boyer, Charles},
      title = {Public Pensions and State Government Borrowing Costs},
      publisher = {University of Chicago},
      school = {Ph.D.},
      address = {2020-06},
      number = {THESIS},
      pages = {111},
      abstract = {I explore what U.S. state government bond prices imply  about the relative recovery rates of

pensioners and  debtholders in a state default. Across U.S. states from  2005 to 2016, a one-

standard-deviation increase in the  ratio of unfunded pension liabilities to GDP is  associated

with a 27-32 basis point increase in bond  spreads over the Treasury rate. Unfunded pensions

cost  U.S. states over $2 billion in lost bond issuance proceeds  in 2016. Event study exercises

examining the reactions of  bond spreads to a pension reform in Illinois provide  evidence that

the effct of unfunded pension liabilities on  bond spreads is causal. The effect of unfunded

pension  liabilities on bond spreads is stronger in states where  pensioners are likely to have

higher bargaining power or  legal protection in a default. These facts are consistent  with

predictions from a structural model of municipal  government credit, and model estimates

reveal substantial  cross-sectional variation in investor perceptions of  pension seniority. These

perceptions are related to  state-level political and legal factors which may affect  recovery

rates of pensioners in a default.},
      url = {http://knowledge.uchicago.edu/record/2319},
      doi = {https://doi.org/10.6082/uchicago.2319},
}