Opioid Crisis Effects On Municipal Finance

We use full-population data at the individual death certificate, prescribed opioid pill, and individual municipal bond level to investigate the effects of the opioid crisis on local governments. The opioid epidemic lowers credit ratings and increases new offer yields among the most affected counties. More importantly, higher opioid death rates reduce new issuance of municipal bonds. We exploit both the distribution channel and type of opioid prescribed to form an instrumental variable to identify these effects on capital market access, and show that Prescription Drug Monitoring Programs (PDMPs) partially reverse these effects using state border-discontinuity difference-in-differences identification