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Economic policy and the presidential election cycle in stock returns

  • Ray Sturm


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    Many papers in the academic literature have documented a “Presidential Election” cycle in stock returns. Prior literature also documents that stock returns appear to be influenced by economic policy. The goal of this study is to examine the tools of fiscal and monetary policy to test for the presence of a presidential election cycle. The findings strongly suggest that the presidential election cycle in stock returns and the government’s economic policy influence on stock returns are two separate phenomena. Moreover, it is much more likely that stock returns are influencing economic policy rather than the other way around. However, the findings also suggest that tax legislation may drive the Presidential Election Cycle. Copyright Springer Science+Business Media, LLC 2013

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    Article provided by Springer in its journal Journal of Economics and Finance.

    Volume (Year): 37 (2013)
    Issue (Month): 2 (April)
    Pages: 200-215

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    Handle: RePEc:spr:jecfin:v:37:y:2013:i:2:p:200-215
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    17. Jinliang Li & Jeffery A. Born, 2006. "Presidential Election Uncertainty And Common Stock Returns In The United States," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(4), pages 609-622.
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