Economic policy uncertainty and stock market participation

Arbeitspapier

Does economic policy uncertainty affect household stockholding? To answer this question we create a novel measure of household exposure to economic policy uncertainty news by combining survey information on the hours a household spends in reading newspapers and the frequency of such news in the popular press during a household's pre-interview period. After controlling for household fixed effects, month-year fixed effects and time-varying cognitive skills, we find that households with a higher exposure to economic policy uncertainty news are less likely to invest in stocks held directly or through mutual funds. This effect is independent from the market volatility index and household (first-moment) expectations about the stock market index.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper Series ; No. 590

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Criteria for Decision-Making under Risk and Uncertainty ; Portfolio Choice; Investment Decisions
• Subject: economic policy uncertainty ; household finance ; stockholding ; text analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gábor-Tóth, Enikő ; Georgarakos, Dimitris
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/176703
• URN: urn:nbn:de:hebis:30:3-437410
• Last update: 10.03.2025, 11:44 AM CET