Recognizing the role of debt issuance as an important source of funding for public works, this article uses panel estimation methods to examine the dynamic factors influencing long-term debt issuance in America’s principal cities. While the random effects multivariate regression suggests that financial factors are the main drivers of long-term debt issuance, the cointegration analyses reveal that debt issuance maintains a long-term dynamic relationship with local financial, economic, and socio-demographic factors. Moreover, the vector error correction estimations show that a long-run relationship exists among local debt issuance and municipal level variables measuring economic, financial, and socio-demographic factors, and any deviations in the short term from the long-run path are slowly corrected over time. The study implies that the dynamic interactions between local debt and municipal factors should be considered when issuing debt for public works.
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