Title: Economic policy uncertainty and stock market participation
Authors: Eniko Gabor-Toth - Deutsche Bundesbank (Germany) [presenting]
Abstract: Does economic policy uncertainty affect household stockholding? To answer this question, a novel measure is created for household exposure to economic policy uncertainty news by combining survey information on the hours a household spends in reading newspapers and the frequency of such news in the popular press during a households pre-interview period. After controlling for household fixed effects, month-year fixed effects and time-varying cognitive skills, we find that households with more exposure to economic policy uncertainty news are less likely to invest in stocks directly or through mutual funds. This effect is independent of the VIX and household stock-price expectations.