The Effect of Presidential Political Affiliation on Economic Conditions in the U.S.

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Sipila, Alpo
Hawthorne, Dane
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Scholarship Sewanee 2020 , Political party affiliation , President , Economic conditions based on political party
The goal of this research is to examine the effect of presidential political affiliation on economic conditions in the US. Previous studies focus extensively on the effect of political affiliation on the stock market. We take a step further and focus on the economy more broadly by estimating the effect on stock market performance, real GDP, and the unemployment rate. We find that under Republican administrations, the change in real GDP is on average 2.97% lower than under Democratic administrations. However, we find no significant evidence of a correlation between presidential political affiliation and the unemployment rate or stock market performance. Our findings support findings from previous research and are important in showing how general views on the strong effect of partisan politics on the economy might be overstated.