Data and Code for "The Option Value of Municipal Liquidity"

Principal Investigator(s): View help for Principal Investigator(s) Andrew Haughwout, Federal Reserve Bank of New York; Benjamin Hyman, Federal Reserve Bank of New York; Or Shachar, Federal Reserve Bank of New York

Version: View help for Version V1

Name	File Type	Size	Last Modified
HHS_MLF_AEJ_Replication			02/04/2026 05:42:PM

Project Citation:

Haughwout, Andrew, Hyman, Benjamin, and Shachar, Or. Data and Code for “The Option Value of Municipal Liquidity.” Nashville, TN: American Economic Association [publisher], 2026. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2026-04-01. https://doi.org/10.3886/E238079V1

Project Description

Summary: States and localities are relied upon to implement macroeconomic stabilization policies and ensure service delivery in times of crisis. In April 2020, the introduction of the Municipal Liquidity Facility (MLF) added an emergency lending instrument to the policy arsenal guaranteeing liquidity but at a price. Using a regression discontinuity design that exploits MLF lending eligibility population cutoffs, we find that the MLF contributed to the easing of liquidity pressures and reduced perceived credit risk for municipal borrowers. Low-rated issuers experienced yields reductions of at least 26 bps. We also provide suggestive evidence that these liquidity effects translated into employment gains.

Scope of Project

JEL Classification:
E52 Monetary Policy
H74 State and Local Borrowing

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Published Versions

V1 [2026-04-01]

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