Weijia Zhao

I am a fifth year Finance PhD candidate at Kellogg School of Management, Northwestern University.

My research interests are in political economy and financial economics.

I am on the 2023-2024 job market (East Asia-Oceania).

Curriculum Vitae: CV

Research Statement: Statement

Email: weijia.zhao@kellogg.northwestern.edu

Job Market Paper

Taking Sides: Political Alignment and Municipal Bond Yield

Abstract: This paper studies the effect of political alignment between state governors and counties on municipal bond yield spreads. Exploring close gubernatorial elections, we find that politically misaligned counties face higher yield spreads while aligned ones benefit from lower spreads. The magnitude of the effect varies on bond characteristics: bonds with long maturity, backed by utility revenue, and issued by counties less reliant on state transfers are less sensitive to political alignment shock. In addition, yield spread variations correlate with changes in credit risk and inter-governmental transfers. Politically misaligned counties elevate bond issuance despite augmented costs, offsetting reductions in intergovernmental transfers.