Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 20, 2020 erstellt
Beschreibung:
We develop an index, termed the Government Legislative Index (GLX), that measures the ability of the US Government to execute legislation. In essence, the GLX measures the ability of the President and the ruling party to successfully convert proposed legislation into rules and regulations. Additionally, the index provides important insights about stock market movements. One, the GLX comoves positively with stock market performance, and two, for high values of GLX, it comoves negatively with stock market volatility. It also outperforms related indexes in these contexts. Three, we find that the relationship between the GLX and financial markets varies by industry sector and stock market capitalization (deciles). Four, within the context of presidential terms, the GLX is higher during the second-term of a presidency, and for Democratic presidents, vis-a-vis Republican presidents, the GLX is higher by as much as 6.4%, thus, contributing insight into the presidential puzzle. In sum, the GLX enhances our understanding of overall market uncertainty and is a valuable predictor of financial market performance