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Is factionalism a push for gold price?

Meng Qin, Chi-Wei Su, Ran Tao and Muhammad Umar

Resources Policy, 2020, vol. 67, issue C

Abstract: This paper investigates the role of factionalism in pushing for gold price (GP) from the perspective of the U.S. partisan conflicts (PCI). We examine the Granger causality between these two variables through the full- and sub-sample rolling-window bootstrap tests, the time-varying relationship between PCI and GP can be observed. There are positive influences from PCI to GP, which indicates that factionalism can be considered as a push for the price of gold. This result is supported by the inter-temporal capital asset pricing model, which underlines that GP will change in the same direction as PCI. Conversely, the negative effects from GP to PCI highlight that gold market can be viewed as a tool to predict the U.S. political conditions. In the context of more serious factionalism in U.S., the interaction mechanism between partisan conflicts and gold price can provide insights for the investors to adjust investment decisions and maintain wealth, and for governments to increase the public confidence and stabilize the civil strife.

Keywords: Partisan conflicts; Gold price; Granger causality; Time-varying (search for similar items in EconPapers)
JEL-codes: C32 G12 N42 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.resourpol.2020.101679

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