Does political uncertainty influence firm owners‘ business perceptions?

Arbeitspapier

Using microdata that serve as the foundation of the ifo Business Climate Index, Germany’s leading business cycle indicator, I examine whether political uncertainty influences how firm owners perceive their present state and future development of business. I use state election months as indicators of times of high political uncertainty. The results show that firm owners are optimistic regarding their expected business development before state elections. After state elections firms change their expectations and expect their business to develop worse. It is conceivable that firm owners are more optimistic prior to state elections because politicians promised individual policies to gratify the firms’ needs during election times. Firms might be disappointed after elections as the promises made during election campaigns by politicians turn out to be empty words.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 226

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Firm Behavior: Empirical Analysis ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Fiscal Policies and Behavior of Economic Agents: Firm ; State and Local Government; Intergovernmental Relations: General
• Subject: Business perceptions ; political uncertainty ; elections ; survey data ; panel data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Riem, Marina
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/149548
• Last update: 10.03.2025, 11:43 AM CET