Real Effects of Markets on Politics: Evidence from US Presidential Elections

Alan D. Crane, Andrew Koch and Leming Lin

American Economic Review: Insights, 2024, vol. 6, issue 1, 73-88

Abstract: Despite the economic importance of the US stock market, there is strikingly little evidence of its impact on elections. Using county-level variation in stock market participation, we document the impact of market returns on election outcomes. High-participation counties are more likely to vote for the incumbent party when the market has performed well relative to low-participation counties. Our findings provide evidence of a novel channel through which stock market fluctuations could be transmitted into the real economy.

JEL-codes: D72 G12 G35 G41 G51 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aeri.20220240

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