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Political orientation of government and stock market returns

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  • Bialkowski, Jedrzej
  • Gottschalk, Katrin
  • Wisniewski, Tomasz

Abstract

Prior research documented that U.S. stock prices tend to grow faster during Democratic administrations than during Republican administrations. This letter examines whether stock returns in other countries also depend on the political orientation of the incumbents. An analysis of 24 stock markets and 173 different governments reveals that there are no statistically significant differences in returns between left-wing and right-wing executives. Consequently, international investment strategies based on the political orientation of countries' leadership are likely to be futile.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 307.

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Date of creation: Jul 2006
Date of revision: Nov 2006
Handle: RePEc:pra:mprapa:307

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Keywords: Stock market returns; Politics; Presidential puzzle;

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Citations

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Cited by:
  1. Tomasz Wisniewski & Geoffrey Lightfoot & Simon Lilley, 2012. "Speculating on presidential success: exploring the link between the price–earnings ratio and approval ratings," Journal of Economics and Finance, Springer, vol. 36(1), pages 106-122, January.
  2. David Le Bris, 2012. "Stock Returns, Governments and Market Foresight in France, 1871-2008," Working Papers CEB 12-007, ULB -- Universite Libre de Bruxelles.
  3. Gabriel Rodríguez & Alfredo Vargas, 2011. "Impacto de Expectativas Políticas en los Retornos del Indice General de la Bolsa de Valores de Lima," Documentos de Trabajo 2011-323, Departamento de Economía - Pontificia Universidad Católica del Perú.
  4. K. Arin & Alexander Molchanov & Otto Reich, 2013. "Politics, stock markets, and model uncertainty," Empirical Economics, Springer, vol. 45(1), pages 23-38, August.

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