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http://ssrn.com/abstract=1449239
 
 

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Wall Street and Elections in Latin American Emerging Democracies


Javier Santiso


ESADE Business School

Sebastián Nieto Parra


Organization for Economic Co-Operation and Development (OECD)

2009

APSA 2009 Toronto Meeting Paper

Abstract:     
This paper focuses on the interactions between the political cycle and capital markets in emerging economies, examining the way in which Wall Street strategists react to major Latin American political events, specifically presidential elections. For this purpose we construct a database of all sovereign bond recommendations of the major investment banks active in emerging bond markets from 1997 to 2008. Assessing the impact of presidential elections on investment banks' recommendations, we conclude firstly, that the political cycle is a major determinant variable in explaining the downgrading of sovereign bonds in the three months prior to presidential elections. Secondly, the credibility of future macro (fiscal and monetary) policies announced by presidential candidates during campaigns stands out as an important determinant of investment banks' recommendations. In particular, if candidates are not committed to defend sustainable macroeconomic policies, investment banks' downgrade sovereign debt prior to elections.

Number of Pages in PDF File: 57

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Date posted: August 13, 2009 ; Last revised: August 18, 2009

Suggested Citation

Santiso, Javier and Nieto Parra, Sebastián, Wall Street and Elections in Latin American Emerging Democracies (2009). APSA 2009 Toronto Meeting Paper. Available at SSRN: http://ssrn.com/abstract=1449239

Contact Information

Javier Santiso (Contact Author)
ESADE Business School ( email )
Mateo Inurria 27
Madrid, 28036
Spain
Sebastián Nieto Parra
Organization for Economic Co-Operation and Development (OECD) ( email )
2 rue Andre Pascal
Paris, 75775
France
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