Political Uncertainty and Financial Market Uncertainty in an Australian context
This paper seeks to investigate the influence of political uncertainty, surrounding the Australian federal election cycle, on financial market uncertainty. Measures of political uncertainty are constructed and their relationship with market uncertainty, as measured by implied volatility, explored. E...
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| Format: | Journal Article |
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Elsevier BV * North-Holland
2014
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| Online Access: | http://hdl.handle.net/20.500.11937/39867 |
| _version_ | 1848755711210684416 |
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| author | Smales, Lee |
| author_facet | Smales, Lee |
| author_sort | Smales, Lee |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | This paper seeks to investigate the influence of political uncertainty, surrounding the Australian federal election cycle, on financial market uncertainty. Measures of political uncertainty are constructed and their relationship with market uncertainty, as measured by implied volatility, explored. Empirical evidence suggests that increasing (decreasing) levels of uncertainty around the election induce higher (lower) levels of market uncertainty. An increasing likelihood of the incumbent party, whose economic policies are presumably well-known, winning the election, reduces market uncertainty. This relationship is stronger when political uncertainty is highest, when the business cycle contracting, and when the level of economic risk is high. Higher levels of political uncertainty tend to be associated with declining levels of outstanding debt, and lower issuance of long-term Government debt, driven by falling demand and higher yields. |
| first_indexed | 2025-11-14T09:00:39Z |
| format | Journal Article |
| id | curtin-20.500.11937-39867 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:00:39Z |
| publishDate | 2014 |
| publisher | Elsevier BV * North-Holland |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-398672019-02-19T05:35:18Z Political Uncertainty and Financial Market Uncertainty in an Australian context Smales, Lee Debt issuance Financial market uncertainty Political uncertainty Implied volatility Stock markets This paper seeks to investigate the influence of political uncertainty, surrounding the Australian federal election cycle, on financial market uncertainty. Measures of political uncertainty are constructed and their relationship with market uncertainty, as measured by implied volatility, explored. Empirical evidence suggests that increasing (decreasing) levels of uncertainty around the election induce higher (lower) levels of market uncertainty. An increasing likelihood of the incumbent party, whose economic policies are presumably well-known, winning the election, reduces market uncertainty. This relationship is stronger when political uncertainty is highest, when the business cycle contracting, and when the level of economic risk is high. Higher levels of political uncertainty tend to be associated with declining levels of outstanding debt, and lower issuance of long-term Government debt, driven by falling demand and higher yields. 2014 Journal Article http://hdl.handle.net/20.500.11937/39867 10.1016/j.intfin.2014.07.002 Elsevier BV * North-Holland fulltext |
| spellingShingle | Debt issuance Financial market uncertainty Political uncertainty Implied volatility Stock markets Smales, Lee Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title | Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title_full | Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title_fullStr | Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title_full_unstemmed | Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title_short | Political Uncertainty and Financial Market Uncertainty in an Australian context |
| title_sort | political uncertainty and financial market uncertainty in an australian context |
| topic | Debt issuance Financial market uncertainty Political uncertainty Implied volatility Stock markets |
| url | http://hdl.handle.net/20.500.11937/39867 |