Global political uncertainty and asset prices

Jonathan Brogaard, Lili Dai, Phong T. H. Ngo, Bohui Zhang

Research output: Contribution to journalArticlepeer-review

22 Citations (Scopus)


We show that global political uncertainty, measured by the U.S. election cycle, on average, leads to a fall in equity returns in fifty non-U.S. countries. At the same time, market volatilities rise, local currencies depreciate, and sovereign bond returns increase. The effect of global political uncertainty on equity prices increases with the level of uncertainty in U.S. election outcomes and a country’s equity market exposure to foreign investors, but does not vary with the country’s international trade exposure. These findings suggest that global political uncertainty increases investors’ aggregate risk aversion, leading to a flight to safety.(JEL F30, F36, G12, G15, G18)

Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
Original languageEnglish
Pages (from-to)1737–1780
Number of pages44
JournalReview of Financial Studies
Issue number4
Publication statusPublished - Apr 2020
Externally publishedYes


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