19
Nov 2020

Seminario de Finanzas – Andrew Koch

Santiago
Tipo de Evento: Seminario

Paper

Real Effects of Markets on Politics: Evidence from U.S. Presidential Elections

 

Link al draft

https://www.dropbox.com/s/d2pvmhw8hr5cj3l/Elections_StockMarket.pdf?dl=0

 

Autores

Alan Crane (Rice); Andrew Koch (Pittsburgh); Leming Lin (Pittsburgh)

 

Abstract

Despite the economic importance of the U.S. stock market, there is strikingly little evidence of its impact on elections. Using county-level variation in stock market participation, we document a causal impact of market returns on election outcomes. High-participation counties are more likely to vote for the incumbent party when the market has performed well relative to low-participation counties. The effect is weaker in Republican-leaning counties and more politically active counties, and comes mostly through the intensive margin rather than affecting turnout. Our  findings provide evidence of a novel channel through which stock market fluctuations could be transmitted into the real economy.

19
Nov 2020
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