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The political advantage of a volatile market: the relationship between Presidential popularity and the ‘investor fear gauge’
Author(s) -
Schwartz Joe,
Hoover Scott,
Schwartz Adam
Publication year - 2008
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.291
Subject(s) - presidential system , popularity , volatility (finance) , economics , politics , financial economics , index (typography) , monetary economics , political science , law , world wide web , computer science
The Chicago Board Options Exchange's (CBOE) Volatility Index (VIX) is the premier established benchmark of near‐term market volatility. It is also referred to as the ‘investor fear gauge’ because it provides a consistent measure of market turmoil. We examine the VIX as it relates to Presidential popularity as indicated by the Gallup Organization's ongoing poll of US Presidential approval ratings. Our analysis indicates that the expected volatility of the market is highly related to Presidential approval. We then examine the strength and implications of this relationship in order to further establish the link between the economy and Presidential approval. Copyright © 2008 John Wiley & Sons, Ltd.