Browse CFA Level 2

Chapter 16: Behavioral and Political Economy Factors

In this section

  • Political Cycles and Election Effects on Policy
    This section explores how election cycles and political factors influence fiscal and monetary policy, shaping economic outcomes and investor decision-making. We also examine the role of central bank independence, political gridlock, and policy reversals that affect global markets.
  • Government Stability and Market Sentiment
    Explore how a nation’s political stability influences market sentiment, foreign investment, and long-term economic growth, with real-world examples, rating agency insights, and frameworks for assessing governance.
  • Behavioral Economics in Macroeconomic Decisions
    Explore how cognitive biases, herd behavior, and bounded rationality shape macroeconomic policy decisions, with real-world examples and guidelines for CFA Level II exam readiness.
  • Geopolitical Risks and Asset Pricing
    Learn how geopolitical shocks, tensions, and black swan events reshape global capital flows, currency valuations, and corporate strategies, informing a deeper understanding of asset pricing and risk management.
  • Vignette-Based Scenarios: Policy Shifts and Investor Behavior
    Explore how dramatic policy changes interact with behavioral biases in the context of CFA Level II Economics vignettes. Learn a structured approach to analyzing political and economic shifts, plus sample item sets and calculations to predict market reactions.
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