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Market volatility across asset classes during U.S. presidential and mid-term elections

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  • Botta, Corrado
  • Sakariyahu, Rilwan

Abstract

Does political uncertainty around elections translate to measurable market effects? This study investigates the impact of the U.S. presidential election on market volatility across different asset classes from 1992 to 2024. Using an event study approach, we document high abnormal volatility in pre-election months and during election weeks and low abnormal volatility in pre-election weeks and election months. The effects vary substantially across asset classes and are amplified during recessions. We examine multiple election characteristics, finding significant roles for political polarization, incumbent status, party changes, election margin, and international tensions.

Suggested Citation

  • Botta, Corrado & Sakariyahu, Rilwan, 2025. "Market volatility across asset classes during U.S. presidential and mid-term elections," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010128
    DOI: 10.1016/j.frl.2025.107754
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    References listed on IDEAS

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    1. Ampountolas, Apostolos, 2025. "Political uncertainty and market regimes: Clustering evidence from the 2024 U.S. election cycle," Finance Research Letters, Elsevier, vol. 86(PB).

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    Keywords

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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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