Working Paper: NBER ID: w15643
Authors: Alexander Whalley
Abstract: This paper investigates whether methods of public official selection affect policymaking in cities. I draw on the unique characteristics of California's city referendum process to identify the causal effect of city treasurers' method of selection on their cities' debt management policies. I utilize a regression discontinuity strategy based on the effect of narrowly-passing appointive city treasurer referendums on city borrowing costs. The results indicate that appointive treasurers reduce a city's cost of borrowing by 13% to 23%. The results imply that if all cities in California with elected treasurers were to appoint them, total borrowing expenditures would be reduced by more than $20 million per year. Appointive city treasurers appear to reduce borrowing costs primarily through the refinancing of expensive debt at lower interest rates.
Keywords: city treasurers; debt management; public policy; regression discontinuity
JEL Codes: D7; H1; H7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| appointive city treasurers (H79) | refinancing of expensive debt at lower interest rates (G32) |
| refinancing of expensive debt at lower interest rates (G32) | borrowing costs (H74) |
| if all cities with elected treasurers appointed them (H79) | total borrowing expenditures decrease by over $20 million annually (H74) |
| appointive effect (D72) | differences in debt restructuring policies (F34) |
| bureaucratic control over city debt management (H74) | lower borrowing costs (G21) |
| appointive city treasurers (H79) | borrowing costs (H74) |
| narrowly passing appointive treasurer referendums (D72) | appointive city treasurers (H79) |