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The impact of presidential economic approval rating on stock volatility: An industrial perspective

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  • Li, Xiaodan
  • Gong, Xue
  • Xing, Lu

Abstract

This paper examines the influence of presidential economic approval rating (PEAR) on stock volatility in different sectors. We find that PEAR significantly explain future stock volatility in Health Care, Consumer Staples, Information Technology and Telecom Services sectors both in- and out-of-sample. Interestingly, we find this explanatory power for all sectors exists only during the economic expansions. Finally, we show that the PEAR has long-term predictability on stock markets.

Suggested Citation

  • Li, Xiaodan & Gong, Xue & Xing, Lu, 2024. "The impact of presidential economic approval rating on stock volatility: An industrial perspective," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003568
    DOI: 10.1016/j.frl.2024.105326
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    More about this item

    Keywords

    Presidential economic approval rating; Stock industry; Volatility forecasting;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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