ENGLISH

Democratic Processes and Financial Markets: Pricing Politics

By William Bernhard , David Leblang

Book information

Year
2006
ISBN
0521861225, 9780511607226, 0521678382, 0511607229, 9780521678384, 9780521861229
Open Library ID
OL7751611M
Language
english
Format
PDF
Filesize
2 MB (1934668 bytes)
Edition
1
Pages
272\270
Topic
Economy
Time added
2011-06-04 13:46:07

Description

The authors examine the conditions under which democratic events, including elections, cabinet formations, and government dissolutions, affect asset markets. Where these events have less predictable outcomes, market returns are depressed and volatility increases. In contrast, where market actors can forecast the result, returns do not exhibit any unusual behavior. Further, political expectations condition how markets respond to the political process. When news causes market actors to update their political beliefs, market actors reallocate their portfolios, and overall market behavior changes. To measure political information, Professors Bernhard and Leblang employ sophisticated models of the political process. They draw on a variety of models of market behavior, including the efficient markets hypothesis, capital asset pricing model, and arbitrage pricing theory, to trace the impact of political events on currency, stock, and bond markets. The analysis will appeal to academics, graduate students, and advanced undergraduates across political science, economics, and finance.

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