TY  - RPRT
ID  - publications15880
UR  - http://tse-fr.eu/pub/28077
A1  - He, Yinghua
A1  - Nielsson, Ulf
A1  - Wang, Yonglei
Y1  - 2014/04//
N2  - Political tension causing diplomatic strains rarely escalates into direct violence or war. This paper identifies the economic effects of such non-violent political tension by examining Taiwan’s sovereignty debate. Non-violent events harming the relationship with mainland China lead to an average daily drop of 200 basis points in Taiwanese stock returns. The impact is more severe on firms openly supporting the Taiwanese pro-independence party. Through a series of tests we identify this economic penalty as initiated by mainland authorities, who specifically target political opponents that are economically exposed to mainland China via either investments or exports.
PB  - TSE Working Paper
T3  - TSE Working Paper
KW  - political tension
KW  - political connections
KW  - China
KW  - Taiwan
M1  - working_paper
TI  - Hurting without Hitting: The Economic Cost of Political Tension
AV  - public
ER  -