This paper examines how federal programs targeting individuals can generate economic spillovers for local governments. I examine the unintended consequences of social welfare programs on municipal bond markets, using county-level variation in the rollout of a federal program providing subsidized flood insurance to households. I find that municipalities with broader program access experience smaller declines in property tax revenue following floods. I then show that counties with greater access also face lower financing costs. The effects are most pronounced in high-risk and high-income areas. Overall, these results show how federal subsidies can produce positive local externalities, enhancing fiscal stability.
Presentations: Eastern Finance Association Conference (2024); Rice University's finance seminar (2023)
Job Market Paper
With Alex Butler, Alan Crane and Erik Mayer