MUNICIPAL DEBT: WHAT DOES IT BUY AND WHO BENEFITS?

@article{Galper2014MUNICIPALDW,
  title={MUNICIPAL DEBT: WHAT DOES IT BUY AND WHO BENEFITS?},
  author={Harvey Galper and Kim S. Rueben and Richard Auxier and Amanda Eng},
  journal={National Tax Journal},
  year={2014},
  volume={67},
  pages={901 - 924}
}
This paper examines the incidence of the federal income tax exemption of interest on state and local bonds, applying a fixed-savings, simplified general equilibrium approach to estimate incidence effects on both the sources and uses of income. In contrast to traditional empirical work that allocates the benefit of tax exemption only to current holders of tax-exempt bonds based on current interest rates, we incorporate the fact that the existence of tax exemption causes the taxable interest rate… 

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