TY  - JOUR
AU  - Snowberg,Erik
AU  - Wolfers,Justin
AU  - Zitzewitz,Eric
TI  - Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12073
PY  - 2006
Y2  - March 2006
UR  - http://www.nber.org/papers/w12073
L1  - http://www.nber.org/papers/w12073.pdf
N1  - Author contact info:
Erik Snowberg
Division of Humanities and Social Sciences
MC 228-77
California Institute of Technology
Pasadena, CA 91125
Tel: 626/395-4094
E-Mail: snowberg@caltech.edu

Justin Wolfers
Department of Economics
University of Michigan
611 Tappan St
Lorch Hall #319
Ann Arbor, MI 48104
Tel: 734-764-2447
E-Mail: jwolfers@umich.edu

Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
M2  - featured in NBER digest on 2006-10-01
AB  - Analyses of 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 following the release of flawed exit poll data on Election Day 2004, and then during the vote count, 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.
ER  -