Political Risk in Latin America

Abstract

Abstract Political risk (PR) is a fascinating concept in the political science literature, yet researchers could do more to evaluate PR in Latin America. In this paper, we contribute to filling the gap by presenting the risks investors must consider when building portfolios in developing economies, such as changes in economic policy or impeachment processes. As for the methodology, widely accepted statistical methods are used to test our hypotheses as well as reliable data. Regarding our findings, we discovered that political color determines economic policy (to a certain degree) and that macroeconomic consequences vary based on policy. In addition, we indicate the adverse effects that specific economic policies and impeachment processes have on Latin American stock markets. In conclusion, this research proposed to advance the political science literature and finance interception, and it does it by motivating the discussions. Keywords: Political Risk, Economic Performance, Economic Policy.

Keywords

• Political Risk
• Economic Performance
• Economic Policy.