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Mortgage Market Credit Conditions and U.S. Presidential Elections

50 Pages Posted: 16 Jun 2016  

Alexis Antoniades

Georgetown University School of Foreign Service in Qatar

Charles W. Calomiris

Columbia University - Columbia Business School; National Bureau of Economic Research (NBER)

Date Written: June 16, 2016


Voters punish incumbent Presidential candidates for contractions in the local (county-level) supply of mortgage credit during market-wide contractions of credit, but they do not reward them for expansions in mortgage credit supply in boom times. Our primary focus is the Presidential election of 2008, which followed an unprecedented swing from very generous mortgage underwriting standards to a severe contraction of mortgage credit. Voters responded to the credit crunch by shifting their support away from the Republican Presidential candidate in 2008. That shift was particularly pronounced in states that typically vote Republican, and in swing states. The magnitude of the effect is large. If the supply of mortgage credit had not contracted from 2004 to 2008, McCain would have received half the votes needed in nine crucial swing states to reverse the outcome of the election. The effect on voting in these swing states from local contractions in mortgage credit supply was five times as important as the increase in the unemployment rate; if unemployment had not increased from 2004 to 2008, that improvement in local labor markets would only have given McCain only 9% of the votes needed to win the nine crucial swing states. We extend our analysis to the Presidential elections from 1996 to 2012 and find that voters’ reactions are similar for Democratic and Republican incumbent parties, but different during booms and busts of mortgage credit. These asymmetric results indicate that voters react strongly and negatively to credit supply contraction; however, organized political bargaining (the “smoke-filled room channel”) rather than voting was the primary vehicle for rewarding politicians for supporting government subsidies for mortgage risk during booms.

Keywords: mortgage credit supply, voting, Presidential elections

JEL Classification: D72, E51, G01, G21, L51, N22, N42, P16

Suggested Citation

Antoniades, Alexis and Calomiris, Charles W., Mortgage Market Credit Conditions and U.S. Presidential Elections (June 16, 2016). Columbia Business School Research Paper No. 16-43. Available at SSRN:

Alexis Antoniades (Contact Author)

Georgetown University School of Foreign Service in Qatar ( email )

Education City
Al Huqoul St

Charles Calomiris

Columbia University - Columbia Business School ( email )

3022 Broadway
601 Uris, Dept. of Finance & Economics
New York, NY 10027
United States
212-854-8748 (Phone)
212-316-9219 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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