We study the pricing of political uncertainty in a general equilibrium model of government policy choice. We find that … political uncertainty commands a risk premium whose magnitude is larger in poorer economic conditions. Political uncertainty …

-to-book ratio (M/B) increases with uncertainty about average profitability, especially for firms that pay no dividends. M/B is …

We analyze how changes in government policy affect stock prices. Our general equilibrium model features uncertainty … average. The price fall is expected to be large if uncertainty about government policy is large, as well as if the policy …

Not necessarily. The fundamental value of a firm increases with uncertainty about average future profitability, and … this uncertainty was unusually high in the late 1990s. We calibrate a stock valuation model that includes this uncertainty …, and show that the uncertainty needed to match the observed Nasdaq valuations at their peak is high but plausible. The high …