Political party platforms, control of executive and legislative branches and stock market performance

This research addressed the relationships between economic platforms of a president and the performance of the Dow Jones Industrial Average Index (DJIA). Previous research suggested that the DJIA Index performed better under Democratic administrations because the Democratic Party favored government spending programs. Support for the "Democratic theory" uses Keynesian economics to suggest that increases in government spending will work through a multiplier to increase the gross domestic (national) product and consumption.; Others have suggested that the Republican Party platform favors a strong economy because the Republicans are the party of business. The thinking is that Republican programs tend to encourage business expansion and create jobs, and will raise the gross domestic product and consumer consumption which, in turn, will create wage-paying jobs and more consumer consumption.; Most academic research does not find significant difference in the relationship between the DJIA and the party of the president. The weaknesses and the conflicting conclusions in previous research suggest a need for a more rigorous and, perhaps, a better designed research effort.; This research cannot possible fill all the needs in this topic. However, it does introduce quarterly time series for more complete evaluation. The time period for this research, from the end of World War II in 1945 through 2004 is a period of relatively stable US involvement in the multinational trading environment. The research introduces a concept of the strength of a presidency in terms of his party's control over the House and Senate, and his mandate as measured by his leadership qualities (ability to exploit a mandate from the electorate and majority in the Congress).; The research, and follow-on research on the topic, can improve the understanding of the nature of a president's mandate and the importance of the political and economic skills of the president and his appointees.; There are significant relationships between several of the economic variables and the DJIA, probably due to a strong trend. However, the first difference series neutralizes the trend and the number of correlated variables decreases sharply. Since investor decisions are based on marginal, or rate of change data, the use of first differences is considered a better measure for this research.; A significant increase is found in the rate of change characteristics of many of the time series in the early 1970s. These increases are probably not sustainable in the long run. The need for research in this area is evident. Presidents and Presidential candidates are under pressure from many stakeholders when developing and executing an economic platform, compromises are necessary, and some decisions must be made quickly as political campaigns develop.; A better understanding of the inter-workings of economic policies, environmental changes and constraints on the ability of a president to implement a viable economic platform is important to all concerned.