Presidential Impeachment and US Equity Markets

Peter C. Earle – February 10, 2021 

 

A fairly broad array of academic studies finds a connection between political stability and economic growth. As the setters and overseers of the rules of the game, elected and appointed government officials have a direct impact upon fiscal, monetary, and regulatory policy. If those policies are consistent over time and thus predictable, firms can budget and plan — which in turn sets the stage for economic growth. 

Compared with other nations, the United States has a fairly consistent record of political stability, with a few brief exceptions: the American Civil War, in particular. (Even during the War of 1812, during a foreign invasion, political rule remained essentially intact.) The United States has also experienced little unforeseen presidential turnover, with a single resignation and a few impeachments. One might argue that presidential impeachments are the closest the United States ever comes to true political uncertainty. 

We likely need not ask whether impeachment proceedings affect the financial markets; rather, we need to determine how impeachments affect the financial markets. ...........To Read More.....