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Protectionism, bilateral integration, and the cross section of exchange rate returns in US presidential debates

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  • de Boer, Jantke
  • Eichler, Stefan
  • Rövekamp, Ingmar

Abstract

We study the impact of US presidential election TV debates on the cross section of intraday exchange rate returns of 96 currencies from 1996 to 2016. The performance of the candidates in the debate is an exogenous shock to the election probability. We find that currencies of countries with high levels of bilateral foreign trade with the US depreciate if the election probability of the protectionist candidate increases during the debate, while no significant impact is detected for countries with bilateral US exports to GDP below 2 percent. Expectations about protectionist measures are the main transmission channel of debate outcomes, while the candidates' stance towards military and immigration play a minor role.

Suggested Citation

  • de Boer, Jantke & Eichler, Stefan & Rövekamp, Ingmar, 2024. "Protectionism, bilateral integration, and the cross section of exchange rate returns in US presidential debates," Journal of International Money and Finance, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:jimfin:v:147:y:2024:i:c:s0261560624001219
    DOI: 10.1016/j.jimonfin.2024.103134
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    Keywords

    Exchange rates; US presidential elections; TV debates; Protectionism; Bilateral trade integration;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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