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Economic Brief

Nov. 6, 2019

Richmond Fed Research Links Municipal Default to In-Migration

The Richmond Fed’s latest Economic Brief presents research linking municipal defaults to over-borrowing incentives created by migration into localities.

The research suggests that this link exists for defaults that follow economic busts as well as those that follow economic booms. The authors analyze several possible changes to policy or the financial environment; the research predicts only modest effects from eliminating state-imposed borrowing limits, making certain bailouts available or increasing interest rates to early 1990s levels.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)