Full Citation

Title: Policy Uncertainty and Household Stock Market Participation

Citation Type: Miscellaneous

Publication Year: 2017

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: Using a unique micro-level U.S. panel dataset, we show that households significantly reduce their participation in the stock market during periods of high policy uncertainty. This effect is exacerbated in more uncertain environment during close gubernatorial elections and elections where incumbent governors cannot seek reelections due to term limits. Households that have higher risk tolerance and possess better ability to acquire and process information are affected less by uncertainty. This evidence suggests both risk preferences and information costs explain why uncertainty affects participation. Decline in participation reverses after the election but not fully when there is less resolution in uncertainty due to a change in the ruling party.

Url: https://www.ivey.uwo.ca/cmsmedia/3779618/11-24-agarwal.pdf

User Submitted?: No

Authors: Agarwal, Vikas; Aslan, Hadiye; Ren, Honglin

Publisher: Georgia State University

Data Collections: IPUMS USA

Topics: Other

Countries: