Citation

Politics and Efficient Markets: The Impact of Political Information on Financial Market Performance

Abstract | Word Stems | Keywords | Association | Citation | Similar Titles



Abstract:

The extent to which financial markets are rational, efficient processors of information has perhaps never been as much in doubt as it is now during the ongoing global financial crisis. This paper engages with this debate directly by investigating the effects of one particular type of information, political information, on financial markets. Politics can be the precipitating event that turns a stable financial market equilibrium into an unstable one and can also be the cause of volatility. While previous studies have tended to make arguments about the impact of specific types of political events on financial market performance (e.g. elections, changes to parliamentary coalitions, cabinet formations and cabinet dissolutions), in this paper I make a broader theoretical argument: political information has a systematic tendency to be poorly interpreted by financial market participants. This is because political information is imprecise and open to greater subjective interpretation. Both of these features have been shown in recent economic models to have negative consequences for financial market performance. Thus, this article draws on these existing models and demonstrates, through a series of econometric (GARCH) models, that the unique features of political information make it systematically likely to increase financial market volatility.
Convention
Convention is an application service for managing large or small academic conferences, annual meetings, and other types of events!
Submission - Custom fields, multiple submission types, tracks, audio visual, multiple upload formats, automatic conversion to pdf.Review - Peer Review, Bulk reviewer assignment, bulk emails, ranking, z-score statistics, and multiple worksheets!
Reports - Many standard and custom reports generated while you wait. Print programs with participant indexes, event grids, and more!Scheduling - Flexible and convenient grid scheduling within rooms and buildings. Conflict checking and advanced filtering.
Communication - Bulk email tools to help your administrators send reminders and responses. Use form letters, a message center, and much more!Management - Search tools, duplicate people management, editing tools, submission transfers, many tools to manage a variety of conference management headaches!
Click here for more information.

Association:
Name: International Studies Association Annual Conference "Global Governance: Political Authority in Transition"
URL:
http://www.isanet.org


Citation:
URL: http://citation.allacademic.com/meta/p502438_index.html
Direct Link:
HTML Code:

MLA Citation:

Phillips, Lauren. "Politics and Efficient Markets: The Impact of Political Information on Financial Market Performance" Paper presented at the annual meeting of the International Studies Association Annual Conference "Global Governance: Political Authority in Transition", Le Centre Sheraton Montreal Hotel, MONTREAL, QUEBEC, CANADA, Mar 16, 2011 <Not Available>. 2014-11-26 <http://citation.allacademic.com/meta/p502438_index.html>

APA Citation:

Phillips, L. M. , 2011-03-16 "Politics and Efficient Markets: The Impact of Political Information on Financial Market Performance" Paper presented at the annual meeting of the International Studies Association Annual Conference "Global Governance: Political Authority in Transition", Le Centre Sheraton Montreal Hotel, MONTREAL, QUEBEC, CANADA <Not Available>. 2014-11-26 from http://citation.allacademic.com/meta/p502438_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: The extent to which financial markets are rational, efficient processors of information has perhaps never been as much in doubt as it is now during the ongoing global financial crisis. This paper engages with this debate directly by investigating the effects of one particular type of information, political information, on financial markets. Politics can be the precipitating event that turns a stable financial market equilibrium into an unstable one and can also be the cause of volatility. While previous studies have tended to make arguments about the impact of specific types of political events on financial market performance (e.g. elections, changes to parliamentary coalitions, cabinet formations and cabinet dissolutions), in this paper I make a broader theoretical argument: political information has a systematic tendency to be poorly interpreted by financial market participants. This is because political information is imprecise and open to greater subjective interpretation. Both of these features have been shown in recent economic models to have negative consequences for financial market performance. Thus, this article draws on these existing models and demonstrates, through a series of econometric (GARCH) models, that the unique features of political information make it systematically likely to increase financial market volatility.


Similar Titles:
Information Politics and Environmental Performance: The Impact of the Toxics Release Inventory on Corporate Decision Making

The Politics of Globalized Finance: The Impact of Banking Supervision and Political Constraints on Banking Crises, 1973-2005


 
All Academic, Inc. is your premier source for research and conference management. Visit our website, www.allacademic.com, to see how we can help you today.