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Who’s Afraid of López Obrador? Market Responses to Election Polling Trends during the 2006 Mexican Presidential Campaign

Benton, A. L. ORCID: 0000-0002-2685-4114 (2006). Who’s Afraid of López Obrador? Market Responses to Election Polling Trends during the 2006 Mexican Presidential Campaign. Colombia Internacional, 64, pp. 68-95. doi: 10.7440/colombiaint64.2006.04

Abstract

This article addresses a key issue during the course of Mexico’s 2006 presidential campaign: How did markets react to changes in support for the left-leaning Andrés Manuel López Obrador (PRD)? To answer this question, I develop a series of alternative arguments for how investors would respond changes in PRD support during the campaign. I evaluate the arguments using a times series GARCH model. The results show that changes in the levels of support for the candidate did not affect market returns but they did affect market volatility. Increased electoral uncertainty, as margins narrowed, raised market volatility, while increasing electoral certainty, regardless of whether rises in support were for López Obrador or the market-friendly Felipe Calderón (PAN), reduced it. This finding reveals that investors may have accepted the prospect of a López Obrador presidency ahead of the election but not the possible post-election social and political instability associated with a tight race.

Publication Type: Article
Publisher Keywords: Mexico, presidential elections, public opinion, financial markets, presidential campaigns
Subjects: F History United States, Canada, Latin America > F1201 Latin America (General)
J Political Science > JA Political science (General)
J Political Science > JL Political institutions (America except United States)
Departments: School of Arts & Social Sciences > International Politics
Date Deposited: 08 Nov 2019 10:49
URI: https://openaccess.city.ac.uk/id/eprint/23178
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