Global political ties and the global financial cycle

Arbeitspapier

We study the implications of forging stronger political ties with the US on the sensitivities of stock returns around the world to a global common factor - the global financial cycle. Using voting patterns at the United Nations as a measure of political ties with the US along with various measures of the global financial cycle, we document evidence indicating that stronger political ties with the US amplify the sensitivities of stock returns in developing countries to the global financial cycle. We explore several channels and find that a deepening of financial linkages along with a reduction in information asymmetries and an amplification of sentiment are potentially important factors behind this result.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 23/2023

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; International Finance: General ; International Relations, National Security, and International Political Economy: General ; International Financial Markets
• Subject: global financial cycle ; international spillovers ; political ties ; stock returns

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ambrocio, Gene ; Hasan, Iftekhar ; Li, Xiang
• Event: Veröffentlichung
• (who): Halle Institute for Economic Research (IWH)
• (where): Halle (Saale)
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/281192
• URN: urn:nbn:de:gbv:3:2-1029741
• Last update: 10.03.2025, 11:41 AM CET