Political risk is expected to increase due to emerging markets' increasing influence on the world economy. We identify Legal, Tension, Conflict, and Policy as underlying dimensions through Principal Component Analysis, using a disaggregated political risk index. Using a two-way error correction model Ethnic and Religious Tension is identified as a new and distinct dimension of political risk. Consequently, global investors are likely to benefit from understanding which dimension implies a reward. Investors in particular should direct their attention towards Tension, which seems to command a risk premium regardless of both market and time

Dwellings of historic value offer qualities that benefits the owner or user, or the society in general. Historic preservation involve use of different policies including push and pull strategies to help protect and manage historic valuable dwellings for present and future generations. The majority of previous studies aiming to assess the impact of historic preservation on housing values employ hedonic pricing models to control for the heterogeneous nature of dwellings. These studies show deviant results and cannot, however conclude whether the observed historic preservation premium are due to a policy effect because it is likely to include a heritage effect due to unobserved characteristics that got the dwelling historic preserved in the first place. This study expands upon previous studies by introducing a unique dataset, which combines data of historic preserved dwellings in Oslo, Norway, and data from the housing market from 1990 to 2017, allowing us to study sales prices for the same dwellings both before and after the action of historic preservation. We further address the omitted variable bias by estimating a two-way fixed effects model including a differences-in-differences estimator. Our results suggest a policy premium of about 4%. Moreover, results suggest that the dwellings subject to the strictest policy hold a lower policy premium than the dwellings subject to the less strict policy, what implies quite clear policy recommendations. ¤ Table note: Missing values in the case of year of construction. Pre (post) historic preservation: 2 (13) in the case of historic preserved and 3 (4) in the case of control. Size is measured in square meters.

Historic preservation dwellings offer qualities that benefit to both owners and society. At the same time, the preservation politics might involve some cost and restrictions. Although a large number of studies have aimed to assess the impact of historic preservation on housing values, this study is to our knowledge the first investigated whether the observed historic preservation premium is due to the changed juridical status (a policy effect) or to qualities that are observed by the buyers that are unobserved in the model. By using a unique data set that combines data of preserved historic dwellings in Oslo, Norway, and data from the housing market from 1990 to 2017, we study sales prices for the same dwellings both before and after the event of historic preservation. The higher prices of preserved historic dwellings seem to be caused, by qualities in the dwellings that correlate with the forthcoming historic preservation, not by the policy event itself.