Opioid Crisis Effects On Municipal Finance

60 Pages Posted: 12 Sep 2019 Last revised: 24 Oct 2019

See all articles by Kimberly Rodgers Cornaggia

Kimberly Rodgers Cornaggia

Pennsylvania State University - Department of Finance

John Hund

University of Georgia

Giang Nguyen

Pennsylvania State University - Smeal College of Business

Zihan Ye

Pennsylvania State University - Department of Finance

Date Written: October 5, 2019

Abstract

This paper provides county-level evidence on the impact of opioid abuse on U.S. municipalities' tax revenues, law enforcement costs, credit risk, and access to finance. Complementing prior research on various costs of the crisis at state- and national-levels, we offer a first close look at the effects of the crisis at a much more granular level of government. Our analysis is based on a comprehensive database, including licensed restricted-use data not previously analyzed in the literature. Employing instrumental variable regressions and difference-in-differences analysis, we find evidence of a significant causal decrease in affected municipalities' access to capital.

Keywords: Opioid crisis, Opioid mortality, Municipal markets, Municipal bond rating, Public finance

JEL Classification: G12, G18, H7, I15

Suggested Citation

Cornaggia, Kimberly Rodgers and Hund, John and Nguyen, Giang and Ye, Zihan, Opioid Crisis Effects On Municipal Finance (October 5, 2019). Available at SSRN: https://ssrn.com/abstract=3448082 or http://dx.doi.org/10.2139/ssrn.3448082

Kimberly Rodgers Cornaggia (Contact Author)

Pennsylvania State University - Department of Finance ( email )

306 Business Bldg
University Park, PA 16802
United States
814-865-2243 (Phone)
814-865-3362 (Fax)

HOME PAGE: http://directory.smeal.psu.edu/kjr15

John Hund

University of Georgia ( email )

Athens, GA 30602
United States

Giang Nguyen

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

HOME PAGE: http://directory.smeal.psu.edu/gxn13

Zihan Ye

Pennsylvania State University - Department of Finance ( email )

University Park, PA 16802
United States

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