Elections and Political Risk: New Evidence from Political Prediction Markets in Taiwan

Masami Imai and Cameron Shelton

No 2010-001, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: We examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in Taiwan, a country with two dominant parties whose political cleavage derives mainly from a single issue: the “One China Principle”. We find that during the 2008 Presidential campaign, the share price of Taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the KMT, the party which advocates lifting caps on cross-strait investment in mainland China. The response is strongest for those firms who have already hit their caps.

Keywords: Partisan Effects; Taiwan (search for similar items in EconPapers)
JEL-codes: E44 O16 P16 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010-01
New Economics Papers: this item is included in nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:wes:weswpa:2010-001

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