Pástor, Luboš; Veronesi, Pietro - C.E.P.R. Discussion Papers - 2010
We analyze how changes in government policy affect stock prices. Our general equilibrium model features uncertainty … about government policy and a government that has both economic and non-economic motives. The government tends to change its … average. The price fall is expected to be large if uncertainty about government policy is large, as well as if the policy …