Direct Versus Indirect Federal Bond Subsidies: New Evidence on Cost of Capital

The longstanding debate surrounding the most effective way for the U.S. federal government to subsidize state and local government capital‐raising received renewed attention in recent years due to the passage and subsequent expiration of the taxable Build America Bond (BAB) program. Recent academic studies, as well as reports from the U.S. Treasury Department, claim that the direct subsidy approach as evidenced by the BAB program provides greater bond borrowing cost benefits to state and local governments compared to traditional tax‐exempt bonds. This research investigates the extent to which such borrowing cost benefits may be overstated since it appears previous studies did not adequately account for the early call optionality of tax‐exempt bonds.     

On concepts of efficiency

This is a brief expository article designed to indicate how, by adding extra, natural considerations, a concept which originally appears to be crystal clear can quickly pose some deep problems in definition and in policymaking.     

The Value of Non-Governmental Intelligence: Widening the Field

In the UK, the Joint Intelligence Committee (JIC) has a poor track record of predicting attack. In the US, official inquiries into 9/11 identified ‘a failure of imagination’ to conceive of a large scale threat to the American homeland. There is a long-standing literature on surprise attack which emphasizes that clues to predict attack often exist but are not pieced together by an intelligence sector which is not structured to look in the right direction. In a world of increasingly fragmented threats and weak signals, it is apparent that much of the challenge in intelligence work now lies not in collection but in managing requirements, setting priorities, and conducting incisive analysis based on the ability to imagine new threats. One solution to a failure of imagination is to widen the range of people who can contribute to the task. Non-Governmental analysis of security issues, whether by academia, civil society or the private sector, can help to identify emerging issues and set priorities. Whilst collection of secret intelligence may always remain the preserve of specialist Government agencies, the rest of the intelligence cycle can benefit from external contributions and open source intelligence. We argue that the process of setting intelligence requirements could be opened to a wider range of actors. In conflict environments, there may be particular value in an open process to identify what each side would need to know about the other to confidently seek peace.