Mapping the Presidential Election Cycle in US stock markets

Wing-Keung Wong*, Michael McAleer

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    41 Citations (Scopus)
    124 Downloads (Pure)


    This paper shows that in the almost four decades from January 1965 through to December 2003, US stock prices closely followed the 4-year Presidential Election Cycle. In general, stock prices fell during the first half of a Presidency, reached a trough in the second year, rose during the second half of a Presidency, and reached a peak in the third or fourth year. This cyclical trend is found to hold for the greater part of the last ten administrations, starting from President Lyndon Johnson to the administration of President George W. Bush, particularly when the incumbent is a Republican. The empirical results suggest that the Republican Party may have greater cause to engage in active policy manipulation to win re-election than their Democratic counterparts. There is irony in that bullish runs in the stock market have tended to coincide with sub-periods under Democratic administrations. The existence of the Presidential Election Cycle shown in the paper may constitute an anomaly in the US stock market, which could be useful for investors.

    Original languageEnglish
    Pages (from-to)3267-3277
    Number of pages11
    JournalMathematics and Computers in Simulation
    Issue number11
    Early online date28 May 2009
    Publication statusPublished - Jul 2009

    Scopus Subject Areas

    • Theoretical Computer Science
    • Computer Science(all)
    • Numerical Analysis
    • Modelling and Simulation
    • Applied Mathematics

    User-Defined Keywords

    • EGARCH Intervention model
    • Presidential Election Cycle
    • Returns
    • Spectral analysis
    • Stock prices


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