EconPapers    
Economics at your fingertips  
 

Did Steve Forbes Scare the Municipal Bond Market?

Joel Slemrod and Timothy Greimel

No 6583, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Evidence from daily market data is consistent with the view that the implicit tax rate on 5-year municipal bonds was affected by the chance of a flat tax becoming law, as proxied by the price of Steve Forbes' shares on the Iowa Electronic Market for political candidates; the spread was also affected by the likelihood of a Republican president and the impact of deficit reduction. No similar evidence for the impact of the flat tax could be found for the 30-year municipal market, although that spread does seem to be affected by the probability of a Republican winning the White House, and the lower taxes on capital income that presumably implies. These findings are consistent with market participants taking the flat tax seriously as a short-run possibility, but believing that over a three-decade period the taxation of capital is more likely to be influenced by the party in power than the tax reform fad of the moment. Alternatively it may reflect the fact that, due to several features of 30-year bonds, the changing likelihood of a flat tax is not clearly reflected in that market.

JEL-codes: H24 (search for similar items in EconPapers)
Date: 1998-05
Note: AP PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Joel Slemrod & Timothy Greimel, 1999. "Did Steve Forbes scare the US municipal bond market?," Journal of Public Economics, vol 74(1), pages 81-96.

Downloads: (external link)
http://www.nber.org/papers/w6583.pdf (application/pdf)

Related works:
Journal Article: Did Steve Forbes scare the US municipal bond market? (1999) Downloads
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:nbr:nberwo:6583

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6583

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-22
Handle: RePEc:nbr:nberwo:6583