Abstract:This paper employs a regression-discontinuity (RD) design to ascertain the effects of socialdemocratic government on fiscal policy (budget deficits) and monetary policy (as reflected in inflation) and on currency and bond prices (i.e., exchange rates and yields). The RD design exploits the essentially random application of a treatment-in this case, social-democratic parties gaining government-near a discontinuous break in the probability of receiving that treatment-in this case, a discontinuous rise in the pro… Show more
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