Elections, Political Polarization, and Economic Uncertainty

Scott Baker, Aniket Baksy (), Nicholas Bloom, Steven Davis and Jonathan Rodden ()
Additional contact information
Aniket Baksy: Stanford University
Jonathan Rodden: Stanford University - Department of Political Science

No 2020-145, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: We examine patterns of economic policy uncertainty (EPU) around national elections in 23 countries. Uncertainty shows a clear tendency to rise in the months leading up to elections. Average EPU values are 13% higher in the month of and the month prior to an election than in other months of the same national election cycle, conditional on country effects, time effects, and country-specific time trends. In a closer examination of U.S. data, EPU rises by 28% in the month of presidential elections that are close and polarized, as compared to elections that are neither. This pattern suggests that the 2020 US Presidential Election could see a large rise in economic policy uncertainty. It also suggests larger spikes in uncertainty around future elections in other countries that have experienced rising polarization in recent years.

Keywords: Uncertainty; policy uncertainty; elections; polarization (search for similar items in EconPapers)
JEL-codes: D72 D8 E6 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2020
New Economics Papers: this item is included in nep-mac and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2020145.pdf (application/pdf)

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Working Paper: Elections, Political Polarization, and Economic Uncertainty (2020)
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