Abstract
This paper examines the role of presidential election periods and their effect on long-run interdependence and volatility of the S&P 500 and the NASDAQ Composite indices from 2013 to early 2025. The study comprises four subsamples that cover four US Presidential Administrations, namely, the second term of President Obama, the first term of President Trump, the first term of President Biden, and the initial stage of the second term of President Trump, examining daily closing prices. The GARCH (1,1) model is implemented to examine volatility patterns. The evidence shows how market volatility differs in different election years, with the most significant turbulence observed during the first term of President Trump and President Biden, primarily due to the 2020 Global Health Crisis, the subsequent trade-related crisis, and geopolitical instability. Conversely, the second term of President Obama and the initial stage of the second term of President Trump imply comparatively less volatility.
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Recommended Citation
Palanichamy, Ajai
(2025)
"Stock Market Responses to US Presidential Cycles (2013–2025): From Blue to Red and Back Again?,"
Critical Letters in Economics & Finance:
Vol. 2:
Iss.
1, Article 4.
doi:https://doi.org/10.21427/fqyj-1q59
Available at:
https://arrow.tudublin.ie/clef/vol2/iss1/4
DOI
https://doi.org/10.21427/fqyj-1q59