U.S. Presidential Election Polls and the Economic Prospects of China and Mexico

Hyeongwoo Kim () and Madeline H. Kim

No auwp2020-08, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: Motivated by Mr. Trump's agendas against China and Mexico, we investigate how a candidate's probability of winning the U.S. presidential election affects the financial markets that are related to these countries. Unexpected increases in Trump's winning probability in the 2020 election generate significantly negative long-term effects on the home currency and the stock prices, while the default probability responds significantly positively in the long run. Similar responses, though in the short run, were observed when Mr. Biden's probability of winning increases, which dissipates quickly over time. We note that the responses to the Biden shock resemble those to the Trump shock during the 2016 election, implying that the probability shock of the new entrant candidate tends to create short-run disturbances in the financial market, whereas the probability shock of the incumbent candidate such as Trump in 2020 or Clinton in 2016 tends to stabilize financial markets in the short run.

Keywords: Donald Trump; Joe Biden; Hillary Clinton; Incumbent Candidate; PredictIt; Financial market (search for similar items in EconPapers)
JEL-codes: E44 F31 G15 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cla.auburn.edu/econwp/Archives/2020/2020-08.pdf (application/pdf)

Related works:
Journal Article: U.S. presidential election polls and the economic prospects of China and Mexico (2021)
Working Paper: U.S. Presidential Election Polls and the Economic Prospects of China and Mexico (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:abn:wpaper:auwp2020-08

Access Statistics for this paper

More papers in Auburn Economics Working Paper Series from Department of Economics, Auburn University Contact information at EDIRC.
Bibliographic data for series maintained by Hyeongwoo Kim ().