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Despite the economic importance of the US stock market, there is strikingly little evidence of its impact on elections. Using county-level variation in stock market participation, we document the impact of market returns on election outcomes. High-participation counties are more likely to vote for the incumbent party when the market has performed well relative to low-participation counties. Our findings provide evidence of a novel channel through which stock market fluctuations could be transmitted into the real economy. (JEL D72, G12, G35, G41, G51)
Crane et al. (Wed,) studied this question.