Democratic Processes and Financial Markets

Pricing Politics

Inbunden, Engelska, 2006

AvWilliam Bernhard,David Leblang

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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.

Produktinformation

Utgivningsdatum2006-07-24
Mått156 x 235 x 20 mm
Vikt486 g
FormatInbunden
SpråkEngelska
Antal sidor272
FörlagCambridge University Press
ISBN9780521861229

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William Bernhard is Associate Professor of Political Science at the University of Illinois at Urbana-Champaign. His work has appeared in the American Journal of Political Science, the American Political Science Review, International Organization, International Studies Quarterly, the Journal of Politics, and the Quarterly Journal of Political Science. David Leblang is Associate Professor of Political Science and Research Associate at the Institute for Behavioral Sciences at the University of Colorado. He previously taught at the University of North Texas and at the College of William and Mary. His work has appeared in The American Journal of Political Science, the Quarterly Journal of Political Science, The International Journal of Finance and Economics, and International Organization and International Studies Quarterly. William Bernhard and David Leblang have received the Franklin L. Burdett Pi Sigma Alpha Award from the American Political Science Association and the Robert H. Durr Award from the Midwest Political Science Association.

1. Introduction; 2. Democratic processes and political risk: evidence from foreign exchange markets; 3. When markets party: stocks, bonds, and cabinet formations; 4. The cross-national financial consequences of political predictability; 5. Cabinet dissolutions and interest rate behavior; 6. Bargaining and bonds: the process of coalition formation and the market for government debt in Austria and New Zealand; 7. Time, shares, and Florida: the 2000 Presidential Election and stock market volatility; 8. Polls and pounds: exchange rate behavior and public opinion in Britain; 9. Conclusion: political predictability and financial market behavior.