The Politics of Financial Markets

Session Submission Type: Full Paper Panel

Session Description

As financial markets grow and become more integrated, scholars have begun to assess how they should be regulated, how much autonomy policymakers have to regulate markets, as well as how financial markets respond to policy. This panel develops our understanding of how policymakers manipulate financial markets for their own political benefit and how financial markets respond to political uncertainty. An influential literature argues that financial markets constrain policymakers, as financial assets are more liquid than other assets and may plausibly be withheld from taxation (see Freeman and Quinn 2012). To move this research agenda forward, we must first understand how financial markets respond to political context. As part of this panel, Cox and Saiegh document how sovereign bonds, currencies, and stock yields respond to political uncertainty and revolutionary threats. A second line of inquiry investigates how policymakers regulate and tap into financial markets. Deuber and Epstein assess the challenge of regulating foreign ownership of the financial sector, particularly when crises - and bailouts - have domestic implications. Betz and Pond document that policymakers encourage financial actors to hold government debt, particularly when borrowing costs increase. Ballard-Rosa, Mosley, and Wellhausen show that Left politicians tend to issue sovereign debt in domestic currency, as they want to retain discretion over the value of their debt. Taken together, this panel develops our understanding both of how financial markets respond to political actions, as well as the issue areas in which governments nevertheless retain the ability to regulate financial markets.

Sub Unit

• DIVISION 16: International Political Economy

Chair

• Amy Pond Texas A&M University

Discussants

• Raphael Cunha Florida State University

• Thomas Sattler University of Geneva

Individual Presentations

• Forward-looking Implications of the Vienna Initiative - Rachel Epstein, University of Denver

• Coming to Terms: The Politics of Sovereign Bond Denomination - Cameron Ballard-Rosa, University of North Carolina, Chapel Hill; Layna Mosley, University of North Carolina, Chapel Hill; Rachel Wellhausen, University of Texas at Austin

• Suffrage Expansions and Financial Market Reactions - Gary W. Cox, Stanford University; Sebastian M. Saiegh, University of California, San Diego

• Constraining Creditors: How Governments Generate Demand for their Own Debt - Timm Betz, Texas A&M University; Amy Pond, Texas A&M University