Political uncertainty and macro-financial dynamics in the BRICS

Fredj Jawadi and Thierry M. Pondie

International Economics, 2024, vol. 179, issue C

Abstract: We empirically study the impact of political uncertainty on macro-financial variables (stock prices, inflation, consumption) and behavioral dynamics (consumer confidence, anxiety) in the BRICS over the period 1990–2022. To this end, we applied a panel vector autoregressive (PVAR) model that tests further endogenous interactions between the variables in the model. Accordingly, we find that political uncertainty increases inflation while reducing consumer spending and stock prices. In addition, we find that consumer confidence and investor anxiety are negatively affected by political uncertainty. Our results have different implications, especially for policymakers who have to tackle political uncertainty in order to protect householders and investors more effectively.

Keywords: Political uncertainty; Consumer spending; Inflation; Stock prices; Consumer confidence; PVAR (search for similar items in EconPapers)
JEL-codes: E71 G41 G51 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:179:y:2024:i:c:s2110701724000465

DOI: 10.1016/j.inteco.2024.100523

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