The Causal Effects of Trump's Reelection on Business Expectations of German Firms

Jonas Dovern and Klaus Wohlrabe ()

No 12266, CESifo Working Paper Series from CESifo

Abstract: This paper studies the causal effects of the 2024 US presidential election on business expectations of German manufacturing firms. It exploits the variation in the timing of survey responses to identify shifts in expectations around the election. The probability of reporting negative expectations increases by 12 percentage points. The effect is driven by exporters, especially those exposed to the US economy. It is concentrated among firms that had not anticipated Trump’s re-election, indicating rational expectation updating. Firms reduce planned investment expenditures. The results provide novel evidence that firms are attentive and quickly revise expectations in response to salient policy events.

Keywords: election; survey expectation; export exposure; US president; rational inattention (search for similar items in EconPapers)
JEL-codes: D72 E32 E65 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-eec and nep-iaf
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12266

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