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Stock Returns, Governments and Market Foresight in France, 1871-2008


  • David Le Bris


This paper analyzes the historical relationship between the political coloration of the government and stock market performance in France between 1871 and 2008. The Left-wing/Right-wing dichotomy, which is ubiquitous in French political discourse, is utilized in order to build a comparative analytical framework. During the 150 months characterized by the appointment of a new government regardless the coloration, we find that the monthly stock return is, on average, three times higher than for other months. The market appreciates in value with all new governments. However, in the long run, the real return of French stocks averages 4.40% per year under Left-wing versus 0.11% under Right-wing governments. This difference, although statistically robust, is not the result of added compensation for higher risk investments, nor is it driven by short special periods. The existence of a more favorable macroeconomic context during the rule of Left-wing governments only explains one third of this difference. A large part of the difference is concentrated during the three months prior to a coloration change. Assuming that the market anticipates coloration changes three months in advance, we move the boundaries: the difference in stock returns becomes insignificant.

Suggested Citation

  • David Le Bris, 2012. "Stock Returns, Governments and Market Foresight in France, 1871-2008," Working Papers CEB 12-007, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/109574

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    References listed on IDEAS

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    More about this item


    Political puzzle; Political impact; Information uncertainty; Stock returns; 19th century; 20th century;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-


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