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Protectionism, bilateral integration, and the cross section of exchange rate returns in US presidential debates

Jantke de Boer, Stefan Eichler and Ingmar Rövekamp

No 03/22, CEPIE Working Papers from Technische Universität Dresden, Center of Public and International Economics (CEPIE)

Abstract: We study the impact of US presidential election TV debates on intraday exchange rates of 96 currencies from 1996 to 2016. Expectations about protectionist measures are the main transmission channel of debate outcomes. Currencies of countries with high levels of bilateral foreign trade with the US depreciate if the election probability of the protectionist candidate increases during the debate. We rationalize our results in a model where a debate victory of a protectionist candidate raises expectations about future tariffs and reduces future net exports to the US, resulting in relative depreciation of currencies with high bilateral trade integration.

Keywords: Exchange Rates; US Presidential Elections; TV Debates; Protectionism; Bilateral Trade Integration (search for similar items in EconPapers)
JEL-codes: D72 F31 G14 G15 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ifn, nep-int, nep-opm and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tudcep:0322

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