Local governments facing extreme fiscal stress have few options. One that has historically been rare is filing for Chapter 9 bankruptcy. The limited number of cases has prevented any systematic study of municipal bankruptcy. But given the results of bankruptcy for individuals, there are reasons to believe that bankruptcy can provide a fresh financial start for local governments. This study leverages six municipal bankruptcies in the years immediately following The Great Recession to explore the effects of bankruptcy on local governments’ financial health. It employs a variety of empirical approaches to generate a counterfactual for the bankrupt governments and assess the effects of bankruptcy: synthetic control, propensity‐score matching, staggered difference‐in‐differences, and an event study. The results show that bankruptcy is associated with no declines and some meaningful improvements in financial health. These findings suggest that Chapter 9 bankruptcy may provide extremely stressed local governments with a potential path forward.

中文翻译：

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帮助还是伤害？市政破产的效力

面临极端财政压力的地方政府别无选择。历史上罕见的一种是申请第9章破产。案件数量有限，无法对市政破产进行任何系统的研究。但是考虑到个人破产的结果，有理由相信破产可以为地方政府提供新的财务起点。这项研究利用了这些年6个市政破产紧随其后的大衰退，探讨破产对地方政府的影响“财务健康。它采用了各种经验方法来为破产政府产生事实，并评估破产的影响：综合控制，倾向评分匹配，差异差异交错以及事件研究。结果表明，破产没有减少，财务状况也有了一些有意义的改善。这些发现表明，第9章破产可能为极度紧张的地方政府提供前进的可能之路。