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Presidential Cycles In The Usa And The Dollar-Pound Exchange Rate: Evidence From Over Two Centuries

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  • Rangan Gupta

    (Department of Economics, University of Pretoria South Africa)

  • Mark E. Wohar

    (College of Business Administration, University of Nebraska at Omaha, USA)

Abstract

In this paper, we analyze the impact of the U.S. presidential cycles on the dollar relative to the British pound over the longest possible monthly period of 1791:01 to 2018:10, based on GJR (or threshold generalized autoregressive conditional heteroscedasticity (GARCH)) model. The usage of over two centuries of data controls for sample selection bias, while a GJR model accommodates for omitted variable bias. We find that over the entire sample period, the Democratic regime has indeed depreciated the dollar relative to the pound. However, during the post Bretton Woods era, the depreciation of the dollar is not statistically significant under the Democratic presidents.

Suggested Citation

  • Rangan Gupta & Mark E. Wohar, 2019. "Presidential Cycles In The Usa And The Dollar-Pound Exchange Rate: Evidence From Over Two Centuries," Advances in Decision Sciences, Asia University, Taiwan, vol. 23(2), pages 151-163, June.
    • Handle: RePEc:aag:wpaper:v:23:y:2019:i:2:p:151-163
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    Cited by:

    1. Samar Ashour & David Rakowski & Salil K. Sarkar, 2021. "Currency risk exposure and the presidential effect in stock returns," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(3), pages 469-485, July.

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    More about this item

    Keywords

    Exchange Rate; U.S. Presidential Cycles;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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