Government Fiscal Transparency on Municipal Bond Issuance: Alleviating Information Asymmetry in the Municipal Market

The act of borrowing, obtaining funds today in exchange for a promise to pay them back tomorrow, is one of the most potent and profound activities undertaken in public finance. There is currently in excess of $1.8 trillion in outstanding municipal debt, comprising obligations of approximately 50,000 issuers in 2008. Municipal bonds are more related to the public, because the cost of public debt will be paid by the taxpayers. How to lower the borrowing cost efficiently? The previous studies did not provide a satisfactory answer. This book reviews the development of the municipal market, studies information asymmetry in the market, and proposes a new approach to lowering the borrowing cost -- improving government fiscal transparency. The analysis provides helpful suggestions to municipal bond underwriters, issuers, regulators, and analysts.