Politics and the Stock Market: Evidence from Germany

Christian Pierdzioch and Jörg Döpke

No 1203, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We analyze the interaction of stock market movements and politics in Germany. In contrast to the empirical evidence available for the U.S., we do not find that German stock market returns tend to be higher during liberal than during conservative governments. Also in contrast to results for the U.S., we find no evidence for an election cycle in German stock market returns. However, estimated popularity functions and VARs suggest that stock market returns have had an impact on the popularity of German governments. We find that this result is robust across different VAR specifications and time periods.

Keywords: Political business cycle; Stock market; Germany (search for similar items in EconPapers)
JEL-codes: E32 E44 G12 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (1)

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Journal Article: Politics and the stock market: Evidence from Germany (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1203

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