Partisan impacts on the economy: evidence from prediction markets and close elections

Erik Snowberg, Justin Wolfers and Eric Zitzewitz

No 2006-08, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Political economists interested in discerning the effects of election outcomes on the economy have been hampered by the problem that economic outcomes also influence elections. We sidestep these problems by analyzing movements in economic indicators caused by clearly exogenous changes in expectations about the likely winner during election day. Analyzing high frequency financial fluctuations on November 2 and 3 in 2004, we find that markets anticipated higher equity prices, interest rates, and oil prices and a stronger dollar under a Bush presidency than under Kerry. A similar Republican-Democrat differential was also observed for the 2000 Bush-Gore contest. Prediction market based analyses of all presidential elections since 1880 also reveal a similar pattern of partisan impacts, suggesting that electing a Republican president raises equity valuations by 2-3 percent, and that since Reagan, Republican presidents have tended to raise bond yields.

Keywords: Federal government; Political science; Economic policy (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cdm, nep-fmk and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.frbsf.org/publications/economics/papers/2006/wp06-08bk.pdf (application/pdf)

Related works:
Journal Article: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2007)
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006)
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006)
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006)
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006)
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:fip:fedfwp:2006-08

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().