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In Service of Creditors: Emergency Financial Management and Poison Water in Flint, Michigan

Published in PFM, Vol. 19 No. 3

This case study of the Flint water crisis demonstrates the effects that can result from focusing on the task of improving the creditworthiness of a financially distressed municipality with infrastructure problems. Empirical findings, which incorporate an event study of the impacts on Flint's municipal bondholders, indicate that the creditors of a political subdivision administered by a State appointee may be helped through infliction of a humanitarian crisis while the costs are borne by the State itself and others. Novel forms of financing infrastructure investments are suggested to help resolve the trade-offs between government fiscal discipline and service to the governed people.

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