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Election outcomes and financial market returns in Canada

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  • Chrétien, Stéphane
  • Coggins, Frank
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    Abstract

    This paper investigates the relationship between federal election outcomes and expected returns and volatilities in the Canadian money, bond, equity and currency markets from 1951 to 2006. There is little evidence that investment opportunities are different in minority versus majority parliaments and only money market returns differ in Conservative versus Liberal governments. The equity market performs better in the late part of the electoral cycle than in the first two years. Furthermore, the Canadian equity investment opportunities are better in Democratic versus Republican administrations and in the late versus early parts of the presidential electoral cycle. The Canadian dollar is also affected by American election outcomes. No apparent variation in risk or expected state of the economy accounts for the differences in returns.

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    Bibliographic Info

    Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

    Volume (Year): 20 (2009)
    Issue (Month): 1 (March)
    Pages: 1-23

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    Handle: RePEc:eee:ecofin:v:20:y:2009:i:1:p:1-23

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    Web page: http://www.elsevier.com/locate/inca/620163

    Related research

    Keywords: Financial market returns Election outcomes Political cycle Business cycle;

    References

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