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Journal of Economics and Finance

Erschienen in:

01.07.2009

The Obama effect

verfasst von: Dennis Halcoussis, Anton D. Lowenberg, G. Michael Phillips

Erschienen in: Journal of Economics and Finance | Ausgabe 3/2009

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Abstract

Many observers argued that Barack Obama’s candidacy in the U.S. presidential election of 2008 benefited from the financial crisis and recessionary economic conditions which voters blamed on the Republican administration. However, an empirical examination of stock price and public opinion data indicates that improvements in Obama’s electoral prospects led stock price declines and that gains by Obama were more likely to be followed by falling stock prices than by rising prices. This evidence suggests that the poor performance of the stock market in the days leading up to Obama’s victory was partly caused by, rather than causing, Obama’s success.

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See Steinhauser (2008)

See Balz and Cohen (2008) and TimesOnline (2008).

See Balz and Cohen (2008).

See Brown (2008).

See Meckler (2008).

On the underlying causes of the crisis, see Gorton (2008).

See Ohanian (2008).

See Newman (2008).

See Wall Street Journal, November 6, 2008, p. A1.

http://www.biz.uiowa.edu/iem/markets/data_Pres08.html

For more details on the 2008 U.S. Presidential Election Markets, see Iowa Electronic Markets (2008).

If a stock market “circuit breaker” had occurred, this might be an additional factor potentially impacting the causality measurements because of the possibility of forcing a lagged response in the S&P index. However, a review of major newswires and publications as well as the NYSE website revealed that no equity circuit breakers were triggered during our sample period. See for example Kathleen Pender’s article “Desperately seeking stability” in the San Francisco Chronicle, dated October 30, 2008.

The term “Granger causality” means that x Granger-causes y if observations of x help predict values of y but observations of y do not help predict values of x. See Granger and Newbold (1977, pp. 224–26).

We are assuming that neither presidential candidates nor their staffs were engaging in predatory—essentially insider—market trading. For example, we are assuming that Obama’s staff did not short the market prior to the candidate giving an important speech.

Balz D, Cohen J (2008) Economic fears give Obama clear lead over McCain in poll, Washingtonpost.com, September 24, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092303667_pf.html

Brown DM (2008) Economic turmoil propels Obama, Pa. poll finds, Pittsburgh Tribune-Review, October 1, 2008, http://www.pittsburghlive.com/x/pittsburghtrib/news/s_590943.html

Granger CWJ, Newbold P (1977) Forecasting economic time series. Academic, New York

Gorton GB (2008) The panic of 2007, National Bureau of Economic Research, NBER Working Paper No. 14358, Cambridge, MA, September 2008

Iowa Electronic Markets (2008) http://www.biz.uiowa.edu/iem/, accessed November 9, 2008

Meckler L (2008) Independent voters move toward Obama, Wall Street Journal, October 7, 2008, http://online.wsj.com/article/SB122332442918808789.html

Newman G (2008) The markets are weak because the candidates are lousy: The good news is that an Obama victory is already priced in, Wall Street Journal, October 29, 2008, http://online.wsj.com/article/SB122523927108878301.html

Ohanian LE (2008) Good policies can save the economy: Why we need lower tax rates and more skilled immigrants, Wall Street Journal, October 8, 2008, http://online.wsj.com/article/SB122342618776613613.html, accessed November 8, 2008

Pender K (2008) Desperately seeking stability, San Francisco Chronicle, October 30, 2008

Steinhauser P (2008) CNN poll: GOP takes brunt of blame for economy; Obama gains, CNNPolitics.com, http://www.cnn.com/2008/POLITICS/09/22/cnn.poll/, accessed November 8, 2008

TimesOnline (2008) Obama shoots past McCain in polls amid economic fears, http://www.timesonline.co.uk/tol/news/world/us_and_americas/us_elections/article4818022.ece

Wall Street Journal, November 6, 2008, p. A1

Titel: The Obama effect
verfasst von: Dennis Halcoussis
Anton D. Lowenberg
G. Michael Phillips
Publikationsdatum: 01.07.2009
Verlag: Springer US
Erschienen in: Journal of Economics and Finance / Ausgabe 3/2009
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI: https://doi.org/10.1007/s12197-009-9077-3

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