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a Fabio Franch, PhD
b Andrei Nesterov, PhD
FINANCIAL AND ECONOMIC CONSEQUENCES
of alternating power and governance
ABSTRACT
This article is interested in knowing more about how relevant elections are even from an economic point of view. In other words, the article ask ourselves: Can elections have an impact on the economy? Is an election such an important event that even the market reacts to it? A large portion of the literature on the connection between the election and economy concentrates on researching the impact of economy on the electoral choice. Several works which investigate the effect of election on economy and markets have democratic countries as a sample and neglect countries which do not have a full-fledged democratic system. The paper examines the outcome of the election on the stock market, a country that has not completed its transition to a democratic system and it is actually reverting to a more authoritarian regime; we have found no research investigating this aspect of elections (or even elections in general) and it is in this small niche where we would like to contribute with the work. The research allows comparing the effects of elections with the well-covered field of elections in democratic countries, thus enriching the field with observations relative to whether there are universal laws for elections that apply worldwide.
Keywords: Pooled Panel Generalized Auto Regressive Conditional Heteroskedasticity (PP-GARCH) model, Heteroskedasticity, Cubic spline interpolation, Financial et economy consequences.
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