EconPapers    
Economics at your fingertips  
 

Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections

Erik Snowberg, Justin Wolfers () and Eric Zitzewitz ()

No 1996, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: event study; political economy; prediction markets; elections; partisan effects (search for similar items in EconPapers)
JEL-codes: D72 E3 E6 G13 G14 H6 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-03
New Economics Papers: this item is included in nep-cdm, nep-fin, nep-fmk, nep-mac, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33) Track citations by RSS feed

Published in: Quarterly Journal of Economics, 2007, 122 (2), 807-829

Downloads: (external link)
http://ftp.iza.org/dp1996.pdf (application/pdf)

Related works:
Journal Article: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2007) Downloads
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006) Downloads
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006) Downloads
Working Paper: Partisan impacts on the economy: evidence from prediction markets and close elections (2006) Downloads
Working Paper: Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections (2006) Downloads
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:iza:izadps:dp1996

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2021-06-17
Handle: RePEc:iza:izadps:dp1996