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Does Political Partisanship Cross Borders? Evidence from International Capital Flows

12 marzo 2021 ore 11:00 - 12:30

Aula Luiss Research Seminars, Sede di Luiss

Speaker: Larissa Schaefer, Frankfurt School of Finance & Management

Abstract

Does political partisanship shape the flow of international capital? We provide evidence from two independent settings, corporate loans and equity mutual funds, to show that political alignment with foreign governments affects the capital allocation decisions of Democratic and Republican investors. Our empirical strategy ensures that direct economic effects of foreign elections or bilateral ties between the U.S. and the foreign countries are not driving the result. Overall, our findings imply that the economic effects of political partisanship transcend national borders.