Partisan Shocks and Financial Markets: Evidence from Close National Elections

Daniele Girardi

American Economic Journal: Applied Economics, 2020, vol. 12, issue 4, 224-52

Abstract: This paper estimates the effect of partisan electoral victories on stock and bond markets. We employ a regression-discontinuity-based event study in a sample of 758 worldwide post-1945 national elections, using existing data on parliamentary elections and newly collected data on presidential elections. Left-wing electoral victories cause significant and substantial short-term decreases in stock market valuations, while the response of sovereign bond markets is mostly muted. Stock market effects are stronger and more persistent in elections in which the left's proposed economic policy is more radical and in developing economies.

JEL-codes: D72 G14 N20 N40 O16 O17 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (25)

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DOI: 10.1257/app.20190292

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