This papers shows that unexpected election results explain some of the unexpected variation in foreign exchange rates. The result is based on an event study which examines the behavior of the size of forecast errors implied by futures contracts for exchange rates around elections. Though...

When strategic complementarities lead to the existence of multiple equilibria, a change in control of government may lead to changes in economic behavior by consumers or firms even if the different parties pursue the same policies. The existence of multiple equilibria, however, is not necessary...