NBER

Wendy Rahn

University of Minnesota
1414 Social Science
267 19th Ave. South,
Minneapolis, MN 55455

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Minnesota

NBER Working Papers and Publications

June 2018Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s
with Eric Hilt: w24719
We analyze the effects of ownership of liberty bonds, which were marketed to households during World War I, on election outcomes in the 1920s. In order to address the endogeneity of liberty bond subscriptions, we utilize the local severity of the fall 1918 influenza epidemic, which disrupted the largest liberty bond campaign, as an instrument. We find that counties with higher liberty bond ownership rates turned against the Democratic Party in the presidential elections of 1920 and 1924. This was a reaction to the depreciation of the bonds prior to the 1920 election (when the Democrats held the presidency), and the appreciation of the bonds in the early 1920s (under a Republican president), as the Fed raised and then subsequently lowered interest rates. Our results suggest the liberty bo...

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