Effect of Spain's economic policy uncertainty on ibex-35 profitability

Abstract

This work studies the influence of Spain’s Economic Policy Uncertainty on the profitability of the Ibex-35 taking into account the economic cycle. Applying regression models on a sample spanning from January 2001 to September 2019 we demonstrate how Spain’s Economic Policy Uncertainty reduces the profitability of the Ibex-35, especially in times of recession. For example, in times of recession, the 1-point increase in the Economic Policy Uncertainty level reduces the Ibex-35’s profitability by 0.0232. These findings are useful for both economic policymakers and investors.