Examining the Determinants of State Borrowing Costs: Controlling for Different Terms to Maturity Available to Purchase

Prior studies have developed models to identify factors that determine the borrowing costs for state governments. When state governments borrow money, they usually issue serial bonds. With a serial bond issue, a portion of the principal borrowed is repaid each year, along with the interest payments, over the life of the bond issue. Also, a separate yield‐to‐maturity (YTM) is assigned for the yearly maturities under the serial bond issue.