Document Type
Article
Publication Date
3-14-2018
Publication Title
International Review of Finance
Publisher
Wiley-Blackwell
First page number:
1
Last page number:
12
Abstract
Fiscal policy shocks exert wide-reaching effects, including movements in asset markets. US politics have been characterized historically by a high degree of partisan conflict. The combination of increasing polarization and divided government leads not only to significant Congressional gridlock, but also to spells of high fiscal policy uncertainty. This paper adds to the literature on the relationships between fiscal policy and asset prices in the US economy conditional on the degree of partisan conflict. We analyze whether a higher degree of partisan conflict (legislative gridlock) reduces the efficacy of the effect and response of fiscal policy on and to asset price movements, respectively. We find that partisan conflict does not significantly affect the relationships between the fiscal surplus to gross domestic product (GDP) and housing and equity returns. Rather, if important, partisan conflict affects the actual implementation of fiscal policy actions. © 2018 International Review of Finance Ltd.
Disciplines
Economic Policy | Economics
File Format
File Size
694 Kb
Language
English
Repository Citation
Gupta, R.,
Lau, C. K.,
Miller, S. M.,
Wohar, M. E.
(2018).
U. S. Fiscal Policy and Asset Prices: The Role of Partisan Conflict.
International Review of Finance
1-12.
Wiley-Blackwell.
http://dx.doi.org/10.1111/irfi.12188
Comments
"This is the peer reviewed version of the following article:
Gupta, R., Lau, C. K. M., Miller, S. M., & Wohar, M. E. (2017). US fiscal policy and asset prices: The role of partisan conflict. International Review of Finance., which has been published in final form at 10.1111/irfi.12188. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions."