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Information, Policy, and Market Disorder Under Democracy: Evidences from the United States

In: Critical Perspectives on Emerging Economies

Author

Listed:
  • Purbash Nayak

    (Gokhale Institute of Politics and Economics)

  • Mayank Sharma

    (Gokhale Institute of Politics and Economics)

  • Harshit Shandilya

    (Gokhale Institute of Politics and Economics)

Abstract

Financial markets are perplexed by economic functioning, policies undertaken by the then government which is determined by elections wherein civilians interact and create noise that adds predictable bias while evaluating portfolios. This chapter takes the stand against the possibility of efficient market system while the system interacts socially. Information for the market is in three dimensions—phase (path dependency), economy, and globalization, but underneath all these, there runs an undercurrent of election cycle. Though Republicans are friendly to investor-based ethos, it is the Democratic government that appears to be favoring portfolio at least statistically. But the selfish investor defies ethos of development. The chapter finds that the failure of Republicans is partially related to their taxation anomaly. The convolution of politics, economics, and financial markets is illustrated through a bipolar lens of system with political exogeneity and endogeneity. We found that irrational exuberance among rational but myopic investor’s provisions for growth friendly behavior which is often non-friendly towards the concept of development but without development the endeavors of his feed from the by-product of globalization is incomplete. What solves this conflict? Our answer is Politics. Further, our analysis suggests that financial market is in disorder following their denial towards development. In order to reach a favorable state, one needs to first identify broader aspects of developmental processes.

Suggested Citation

  • Purbash Nayak & Mayank Sharma & Harshit Shandilya, 2021. "Information, Policy, and Market Disorder Under Democracy: Evidences from the United States," Contributions to Economics, in: Aswini Kumar Mishra & Vairam Arunachalam & Debasis Patnaik (ed.), Critical Perspectives on Emerging Economies, chapter 0, pages 57-94, Springer.
  • Handle: RePEc:spr:conchp:978-3-030-59781-8_5
    DOI: 10.1007/978-3-030-59781-8_5
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    More about this item

    Keywords

    C30; C35; C54; C51; E0; E02; E03; E42; G01; G02;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E0 - Macroeconomics and Monetary Economics - - General
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G01 - Financial Economics - - General - - - Financial Crises
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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