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A study of correlation between stock market fluctuations and political orientation of incumbent parties

Nilsson, Pontus LU and Hannell, Erik LU (2017) NEKH02 20162
Department of Economics
Abstract
ABSTRACT
This bachelor thesis investigates whether there are any correlation between the political orientation of the incumbent party of a country and the performance of the stock market, i.e. will the stock market behave bullish or bearish depending on whether the political party is located on the right-wing or the left-wing? The study is performed with multiple linear regressions of 13 OECD countries to find out whether there are correlation or not. The dependent variable of the regression is share prices and dummy variables have been used to indicate whether the government is right-wing, center or left-wing. Oil price, GDP, interest rates and US share price are used as independent variables. The result show that there are no... (More)
ABSTRACT
This bachelor thesis investigates whether there are any correlation between the political orientation of the incumbent party of a country and the performance of the stock market, i.e. will the stock market behave bullish or bearish depending on whether the political party is located on the right-wing or the left-wing? The study is performed with multiple linear regressions of 13 OECD countries to find out whether there are correlation or not. The dependent variable of the regression is share prices and dummy variables have been used to indicate whether the government is right-wing, center or left-wing. Oil price, GDP, interest rates and US share price are used as independent variables. The result show that there are no significant correlation between the political orientation of the incumbent party and the stock market performance in most of the countries. However, it appears as though the political orientation matters in the US, and in its turn, the US market has got an effect on the movement of other stock markets. (Less)
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author
Nilsson, Pontus LU and Hannell, Erik LU
supervisor
organization
course
NEKH02 20162
year
type
M2 - Bachelor Degree
subject
keywords
Finance, Economics, Politics, Stock Market, Political Orientation
language
English
id
8902661
date added to LUP
2017-02-10 13:44:16
date last changed
2017-02-10 13:44:16
@misc{8902661,
  abstract     = {ABSTRACT
This bachelor thesis investigates whether there are any correlation between the political orientation of the incumbent party of a country and the performance of the stock market, i.e. will the stock market behave bullish or bearish depending on whether the political party is located on the right-wing or the left-wing? The study is performed with multiple linear regressions of 13 OECD countries to find out whether there are correlation or not. The dependent variable of the regression is share prices and dummy variables have been used to indicate whether the government is right-wing, center or left-wing. Oil price, GDP, interest rates and US share price are used as independent variables. The result show that there are no significant correlation between the political orientation of the incumbent party and the stock market performance in most of the countries. However, it appears as though the political orientation matters in the US, and in its turn, the US market has got an effect on the movement of other stock markets.},
  author       = {Nilsson, Pontus and Hannell, Erik},
  keyword      = {Finance,Economics,Politics,Stock Market,Political Orientation},
  language     = {eng},
  note         = {Student Paper},
  title        = {A study of correlation between stock market fluctuations and political orientation of incumbent parties},
  year         = {2017},
}