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@article{Babina:2021:rfs/hhaa028,
author = {Babina, T and Jotikasthira, C and Lundblad, C and Ramadorai, T},
doi = {rfs/hhaa028},
journal = {The Review of Financial Studies},
pages = {509--568},
title = {Heterogeneous taxes and limited risk sharing: evidence from municipal bonds},
url = {http://dx.doi.org/10.1093/rfs/hhaa028},
volume = {34},
year = {2021}
}

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TY  - JOUR
AB  - We evaluate the impacts of tax policy on asset returns using the U.S. municipal bond market. In theory, tax-induced ownership segmentation limits risk sharing, creating downward-sloping regions of the aggregate demand curve for the asset. In the data, cross-state variation in tax privilege policies predicts differences in in-state ownership of local municipal bonds; the policies create incentives for concentrated local ownership. High tax privilege states have muni bond yields that are more sensitive to variations in supply and local idiosyncratic risk. The effects are stronger when local investors face correlated background risk and/or diminishing marginal nonpecuniary benefits from holding local assets.
AU  - Babina,T
AU  - Jotikasthira,C
AU  - Lundblad,C
AU  - Ramadorai,T
DO  - rfs/hhaa028
EP  - 568
PY  - 2021///
SN  - 0893-9454
SP  - 509
TI  - Heterogeneous taxes and limited risk sharing: evidence from municipal bonds
T2  - The Review of Financial Studies
UR  - http://dx.doi.org/10.1093/rfs/hhaa028
UR  - http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000608395000012&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=1ba7043ffcc86c417c072aa74d649202
UR  - https://academic.oup.com/rfs/article/34/1/509/5803088
UR  - http://hdl.handle.net/10044/1/87054
VL  - 34
ER  -

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