Our speaker will be

Maurizio Montone

(Erasmus School of Economics and Tinbergen Institute).

The talk will take place at 12:00-13:00 in seminar room D4.0.019.

He will give a talk on

"Does the U.S. President affect the stock market?".

Abstract: I develop an asset pricing model with asymmetric information and short-sales constraints, in which investor beliefs are tied to political outcomes. Consistent with the model's predictions, I find that when sentiment and disagreement over the U.S. President's job are high, subsequent stock returns are low. I also find that the difference in returns between Democratic and Republican administrations, known as the "presidential puzzle'' (Santa-Clara and Valkanov, 2003), is actually driven by political disagreement. Overall, the results support the view that political opinions matter for asset prices.