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The Causal Effects of Trump's Reelection on Business Expectations of German Firms

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  • Jonas Dovern
  • Klaus Wohlrabe

Abstract

This paper studies the causal effects of the 2024 US presidential election on business expectations of German manufacturing firms. It exploits the variation in the timing of survey responses to identify shifts in expectations around the election. The probability of reporting negative expectations increases by 12 percentage points. The effect is driven by exporters, especially those exposed to the US economy. It is concentrated among firms that had not anticipated Trump’s re-election, indicating rational expectation updating. Firms reduce planned investment expenditures. The results provide novel evidence that firms are attentive and quickly revise expectations in response to salient policy events.

Suggested Citation

  • Jonas Dovern & Klaus Wohlrabe, 2025. "The Causal Effects of Trump's Reelection on Business Expectations of German Firms," CESifo Working Paper Series 12266, CESifo.
    • Handle: RePEc:ces:ceswps:_12266
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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