General‐Purpose Local Government Defaults: Type, Trend, and Impact

Lang (Kate) Yang and Yulianti Abbas

Public Budgeting & Finance, 2020, vol. 40, issue 4, 62-85

Abstract: Local governments default on bonds when they fail to comply with the monetary and nonmonetary aspects of the debt contracts. Analyses of defaults have relied on reports from credit rating agencies, which include only rated bonds undergoing monetary defaults. Using a unique and comprehensive dataset of defaults, we examine all general‐purpose government defaults from 2009 to 2015 and find defaults to be more common than previously reported. We present a typology of defaults and characteristics of defaulted bonds. Most defaults occur among nongeneral obligation bonds and did not affect the yield of future, unrelated credits of the same issuer, providing support to the credit segmentation hypothesis.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/pbaf.12266

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:pbudge:v:40:y:2020:i:4:p:62-85

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0275-1100

Access Statistics for this article

Public Budgeting & Finance is currently edited by Philip Joyce and William Simonsen

More articles in Public Budgeting & Finance from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().