Divided We Fall

33 Pages Posted: 9 Dec 2020

See all articles by Joshua Livnat

Joshua Livnat

New York University; Prudential Financial - Quantitative Management Associates

Amir Rubin

Simon Fraser University (SFU) - Beedie School of Business; Interdisciplinary Center (IDC) Herzliyah

Dan Segal

Interdisciplinary Center (IDC) Herzliyah

Date Written: November 19, 2020

Abstract

We analyze the effects of partisan Congressional control on the US economy. We find that economic performance is weaker when no party has the majority in both chambers of Congress (divided Congress). This weaker economic performance is attributed to reduced and less effective regulation. We provide evidence that undivided Congresses, whether Democrat or Republican, tend to enhance economic performance. Republicans seem to create value for large firms, whereas Democrats enhance competition and create value for small firms. Overall, we conclude that congressional cycles and effective regulation are important drivers of economic activity.

Keywords: Congress, Regulation, Industry

JEL Classification: G38, K22, P48

Suggested Citation

Livnat, Joshua and Rubin, Amir and Segal, Dan, Divided We Fall (November 19, 2020). NYU Stern School of Business Forthcoming, Available at SSRN: https://ssrn.com/abstract=3733317 or http://dx.doi.org/10.2139/ssrn.3733317

Joshua Livnat

New York University ( email )

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Prudential Financial - Quantitative Management Associates ( email )

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United States

Amir Rubin (Contact Author)

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150
Israel

Dan Segal

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150
Israel

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