Government Partisanship, Elections, and the Stock Market: Examining American and British Stock Returns, 1930–2000

We construct a model of speculative trading to examine how the mean and volatility of stock prices is affected both by government partisanship and by traders' expectations of electoral victory by the right-wing or left-wing party. Our model predicts that rational expectations of higher inflation under left-wing administrations lowers the volume of stocks traded in the stock market. The decline in trading volume leads to a decrease in the mean and volatility of stock prices not only during the incumbency of left-wing governments, but also when traders expect the left-wing party to win elections. Conversely, expectation of lower inflation under right-wing administrations leads to higher trading volume. This leads to an increase in the mean and volatility of stock prices during the tenure of right-wing governments and when traders anticipate the right-wing party to win elections. Daily and monthly data from U.S. and British equity markets between 1930 and 2000 statistically corroborate the predictions from our formal model.     

Can financial development enhance transparency?

A substantial strand of literature unambiguously established the importance of financial development for economic growth. Relatively less attention has been paid to the impact that financial development of a country can have on important development outcomes like transparency. As established by existing research, strong financial institutions in a country would imply an improved and transparent banking system, better corporate governance, ease of accessing credit, greater availability of information and best practices in investment protection. All these should theoretically promise a more transparent economic system. Our empirical findings confirm this. Using several estimation strategies, our results confirm that greater financial development enhances transparency.     

Reviews

Manuel de Politique Musulmane. Editions Bossard, 43 Rue Madame Paris. 1925.

The Heart of Aryavarta. By the Earl of Ronaldshay, P.C., G.C.S.I., G.C.I.E. Constable and Company Ltd. 14s.

Through Khiva to Golden Samarkand. By Ella R. Christie. Seeley, Service. 21s.

The People of the Steppes. By Ralph Fox. Twelve illustrations and map. Constable and Co. 1925. Pp. 246. 8s. 6d.

A Thousand Years of the Tartars. By E. H. Parker, Professor of Chinese in the Victoria University, Manchester. Fourth Edition. Kegan Paul, Trench, Trubner and Co. 1924.

Mosul and its Minorities. By Harry Charles Luke. Martin Hopkinson. 10s. 6d.

With Lawrence in Arabia. By Lowell Thomas. Hutchinson. 21s.

Through Inner Deserts to Medina. By the Countess Malmignati. Philip Allan and Co. 10s. 6d.

The Lost Oases. By A. M. Hassanein Bey. Messrs. Thornton Butterworth, Ltd. 21s.

1. The Early History of Bengal. By the late F. J. Monahan, Indian Civil Servant. Oxford University Press. 1925.

2. The Early History of Bengal. By R. C. Mazumdar, Professor of History in the University of Dacca. Dacca University Bulletin No. 3. Oxford University Press. 1925.

Census of India, 1921. Vol. IV.: Baluchistan. By Major T. C. Fowle and Rai Bahadur Diwan Jamiat Rai, C.I.E.

English‐Baluchi Colloquial Dictionary. By Major George Waters Gilbertson, assisted by Gháno Khán Haddiani. Published by the Author.     

Are Poor Voters Indifferent to Whether Elected Leaders Are Criminal or Corrupt? A Vignette Experiment in Rural India

Although in theory elections are supposed to prevent criminal or venal candidates from winning or retaining office, in practice voters frequently elect and reelect such candidates. This surprising pattern is sometimes explained by reference to voters’ underlying preferences, which are thought to favor criminal or corrupt candidates because of the patronage they provide. This article tests this hypothesis using 2010 data from the Indian state of Uttar Pradesh, where one in four representatives in the state legislature have a serious criminal record and where political corruption is widespread. Contrary to the voter preference hypothesis, voters presented with vignettes that randomly vary the attributes of competing legislative candidates for local, state, and national office become much less likely to express a preference for candidates who are alleged to be criminal or corrupt. Moreover, voters’ education status, ethnicity, and political knowledge are unrelated to their distaste for criminal and venal candidates. The results imply that the electoral performance of candidates who face serious allegations likely reflects factors other than voters’ preferences for patronage, such as limited information about candidate characteristics or the absence of credible alternative candidates with clean records.     

Bodo ethnic self-rule and persistent violence in Assam: A failed case of multinational federalism in India

Indian federalism has been credited in the literature on comparative federalism for having successfully resolved many of its ethnic conflicts (in a country of immense ethnic diversity) since 1956 by conceding varied forms of statehood. In most cases, the resolution of ethnic conflict has entailed self-determination for ethno-nationalist groups. There are however cases when the experiment has failed and the institutional arrangements for recognition of ethnic self-determination have given birth to more conflicts and persistent violence. In this article, we argue that the Bodoland Territorial Authority (created in 2003) in Assam is a failed case of multinational federalism in India. We argue that the case of Bodoland illustrates the limits of territorial management when groups are intermixed and highlight the need for power sharing in government and/or non-territorial representation as a better method for managing ethnic conflict in such cases.     

Asia-Pacific Remains The Anchor

正The Asia-Pacific region now faces another year of slowing growth, but the region will remain the anchor of global economic stability, said a UN Economic and Social Commission for Asia and the Pacific (ESCAP) survey released in May. In a recent interview with Beijing Review, Amitava     

Extortion,competition among states and private investment in a federation: evidence from Indian manufacturing sector

Economic Change and Restructuring - The paper argues both theoretically and empirically that incidence of extortion reduces the flow of private investment at a state in a federation. The states...     

Dissimilar twins: residue of 1947 in the twenty-first century

In this article Meenakshi Mukherjee traces the impact of the Indian partition of 1947 on the creative writing, films and intellectual life of India and Pakistan.