Uncertainty about Government Policy and Stock Prices

Volume: 67, Issue: 4, Pages: 1219 - 1264
Published: Aug 1, 2012
Abstract
We analyze how changes in government policy affect stock prices. Our general equilibrium model features uncertainty about government policy and a government that has both economic and non-economic motives. The government tends to change its policy after performance downturns in the private sector. Stock prices fall at the announcements of policy changes, on average. The price fall is expected to be large if uncertainty about government policy is...
Paper Details
Title
Uncertainty about Government Policy and Stock Prices
Published Date
Aug 1, 2012
Volume
67
Issue
4
Pages
1219 - 1264
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