How Institutions Interact with Exchange Rates After the 2024 US Presidential Election: New High-Frequency Evidence

Joshua Aizenman and Jamel Saadaoui

No 33193, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates how institutional quality shaped currency responses to the 2024 U.S. presidential election, using high-frequency exchange rate data for 73 countries. We document that virtually all currencies depreciated against the U.S. dollar immediately following the election result. Surprisingly, countries with stronger institutional quality—typically considered more resilient—experienced larger and more persistent depreciations. We interpret this through the lens of a geopolitical realignment: the election marks a structural break in the U.S. role as guarantor of a rule-based international order. Under the new administration's more transactional and bilateralist orientation, strong institutional alignment with liberal democratic norms may have increased perceived exposure to U.S. policy uncertainty. Our findings reveal how political regime shifts in leading economies can reconfigure the global distribution of financial risk premia.

JEL-codes: F01 F31 F36 F4 F40 F42 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-ifn, nep-mon and nep-opm
Note: IFM
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w33193.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
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:nbr:nberwo:33193

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33193
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().