Economic Disturbances and Equilibrium in an Integrated Global Economy

Chapter 7

Economic Policy and Performance: The Small-Cap and Country Effect

Abstract

The framework is easily adapted to understand and perhaps even anticipate the relative stock returns across different localities. The larger companies are more likely to have multiplant facilities, some of which are located outside the local taxing and regulatory jurisdiction. For that reason, we tend to focus on the smaller capitalization stocks in the localities. These are the companies more likely to have all their facilities within a single taxing and regulatory jurisdiction. We believe that these are the companies that are most likely to benefit or suffer the full burden of the local policies.

Keywords

regional economic performance

size effect

stock returns ...