Party Influence in Congress and the Economy / Erik Snowberg, Justin Wolfers, Eric Zitzewitz.

Format:

Book

Author/Creator:

Snowberg, Erik.

Contributor:

National Bureau of Economic Research.

Wolfers, Justin.

Zitzewitz, Eric.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12751.

NBER working paper series no. w12751

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

To understand the extent to which partisan majorities in Congress influence economic policy, we compare financial market responses in recent midterm elections to Presidential elections. We use prediction markets tracking election outcomes as a means of precisely timing and calibrating the arrival of news, allowing substantially more precise estimates than a traditional event study methodology. We find that equity values, oil prices, and Treasury yields are slightly higher with Republican majorities in Congress, and that a switch in the majority party in a chamber of Congress has an impact that is only 10-30 percent of that of the Presidency. We also find evidence inconsistent with the popular view that divided government is better for equities, finding instead that equity valuations increase monotonically, albeit slightly, with the degree of Republican control.

Notes:

Print version record

December 2006.