Do Public Pension Obligations Affect State Funding Costs?

34 Pages Posted: 11 Apr 2013 Last revised: 29 Oct 2014

See all articles by Jean Burson

Jean Burson

Federal Reserve Banks - Federal Reserve Bank of Cleveland

John B. Carlson

Federal Reserve Bank of Cleveland

O. Emre Ergungor

affiliation not provided to SSRN

Patricia Waiwood

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Date Written: May 10, 2014

Abstract

States’ unfunded pension obligations to their current and retired employees have exploded in recent years to levels that are estimated to be between $750 billion and $4.4 trillion. In theory, this massive debt should have implications for states’ ability to meet their financial obligations and a measurable impact on funding costs. Yet, we find no evidence that municipal bond markets are pricing the risks to states’ fiscal health arising from these large obligations.

Keywords: State pensions, unfunded obligations, municipal bond market

JEL Classification: H75

Suggested Citation

Burson, Jean and Carlson, John B. and Ergungor, Ozgur Emre and Waiwood, Patricia, Do Public Pension Obligations Affect State Funding Costs? (May 10, 2014). FRB of Cleveland Working Paper No. 13-01r. Available at SSRN: https://ssrn.com/abstract=2248212

Jean Burson

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

John B. Carlson

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101-1387
United States

Ozgur Emre Ergungor (Contact Author)

affiliation not provided to SSRN

Patricia Waiwood

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
56
Abstract Views
426
rank
366,611
PlumX Metrics