Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247908 
Year of Publication: 
2021
Series/Report no.: 
Staff Report No. 985
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
At the onset of the COVID-19 pandemic, state and local governments were among the sectors expected to experience the most severe distress. The combination of a sharply deteriorating revenue picture, a pressing need for additional expenditures, delays in the receipt of substantial taxes owed, and an inability to access the financial markets raised serious concerns among many observers about the ability of state and local governments to meet their public service delivery responsibilities. In April 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF) to help municipalities manage the cash flow challenges that the pandemic produced. The MLF ultimately offered three-year loans at penalty rates to a set of eligible municipal issuers that included states, large cities and counties, and a number of revenue bond issuers. Research suggests that the MLF, in spite of lending to only the State of Illinois and the Metropolitan Transportation Authority, contributed to a healing in the municipal securities market as a whole. Effects on real economic outcomes like employment in the sector are harder to attribute to facility.
Subjects: 
municipal debt
state and local governments
COVID-19
Federal Reserve lending facilities
JEL: 
G14
G18
H74
Document Type: 
Working Paper

Files in This Item:
File
Size
597.39 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.