Local Debt Management Research Articles

Optimality in Municipal Debt

The recent financial pressure an cities has renewed interest in the management of municipal debt. The concepts of optimum municipal debt and optimum municipal capital stock are examined here. Several popular misconceptions about local debt management are discussed, and counter-assertions are made. A model is proposed for minimization of local debt costs, and it is suggested that municipal investment, rather than municipal indebtedness, ought to be limited.