"Though political economy has had a wide influence in many parts of economics, the study of asset markets has largely been an exception. This book fills that gap, with its insightful and wide-ranging analysis of the effect of politics on stock, bond, and foreign exchange markets. It will be an important and much-needed addition to the bookshelves of students of politics, political economy, and finance." Allan Drazen, University of Maryland

"Democratic Processes and Financial Markets is a genuinely interdisciplinary contribution of tremendous significance. Building on literatures in finance, economics, and political science, Bernhard and Leblang analyze how, in a variety of institutional and historical settings, financial traders process political information. They then produce precise estimates of the magnitudes of political risk premia and of related impacts of politics. Out of their book emerge new and profound insights about the costs of democracy in general and of political uncertainty in particular." John R. Freeman, University of Minnesota

"In Democratic Processes and Financial Markets, William Bernhard and David Leblang show how the prices of financial assets – stocks, bonds, currencies – respond to such political developments as elections, cabinet formations and dissolutions, and trends in other nations. The authors make excellent use of current theoretical and empirical work in economics and political science. Their integration of approaches from the two disciplines is exemplary, and will undoubtedly influence many scholars who want to explore the interplay of economic and political phenomena. This excellent book will be a staple of the growing literature in political economy, and a model of how scholars can integrate theory and empirical work in the analysis of political and economic affairs." Jeffry Frieden, Harvard University

"This path-breaking book builds on the insight that an important part of the general relationship between democracy and capitalism is the relationship between the public events mandated by democratic political institutions and the behavior of asset markets. Using modern theories of finance, economics, and political science, this book provides a rich, deep and wide-ranging analysis that will be of great interest to anyone who wants to understand fully the relationship between these dominant political and economic systems." William R. Keech, Carnegie Mellon University