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Political parties and the economy: Macro convergence, micro partisanship?

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Author Info
Pau Castells () (Institut d'Economia de Barcelona (IEB))
Francesc Trillas () (Institut d'Economia de Barcelona (IEB); Universitat Autònoma de Barcelona (UAB))
Abstract

In the last days of the electoral campaign for the 2004 general election in Spain, on Thursday March 11th 2004, a series of simultaneous terror attacks caused the death of 191 persons in commuting trains in the capital Madrid. Four days later, the opposition party won the election, against all predictions that were made prior to the terror attacks. This change in expectations presents a unique opportunity to take advantage of event study techniques to test some politico-economic hypotheses. The quantitative exercise is carried out employing Seemingly Unrelated Regressions (SUR). Hypothesis testing is improved by means of bootstrapping techniques. Convergence theories prove quite resilient as, jointly, quoted firms were not significantly affected by the election outcome. The results on the impact on particular companies and industries, however, suggest that a combination of capture and agency problems may play a role in explaining the effects of the change in expectations.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2008/1.

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Length: 34 pages
Date of creation: 2008
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Handle: RePEc:ieb:wpaper:2009/3/doc2008-1

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Related research
Keywords: Event study; median voter; agency; capture; elections.;

Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

References listed on IDEAS
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  1. Pantzalis, Christos & Stangeland, David A. & Turtle, Harry J., 2000. "Political elections and the resolution of uncertainty: The international evidence," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1575-1604, October. [Downloadable!] (restricted)
  2. Pauline M. Shum, 1995. "The 1992 Canadian Constitutional Referendum Using Financial Data to Assess Economic Consequences," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 794-807, November.
  3. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March. [Downloadable!] (restricted)
  4. Francesc Trillas, 2004. "The structure of corporate ownership in privatized utilities," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 257-284, May. [Downloadable!]
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This page was last updated on 2009-12-17.

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