2014-06 How much does political uncertainty matter?

We study the role of political uncertainty on economic outcomes using the case of Huey Long’s tenure as governor of Louisiana during the Great Depression. We construct two wellestablished measures of uncertainty specifically for Louisiana using primary sources: stock price volatility and newspaper mentions of uncertainty. Combining these uncertainty measures with employment data from the Census of Manufactures, we attempt to identify the effects of political uncertainty using the state of Mississippi as a control group. We find limited evidence for the significance of political uncertainty in a standard differences-in-differences framework, even when restricting our attention to border counties. Finally, we conduct an event study on the unexpected assassination of Long in September 1935, and again we find no effect on employment. We conclude that whatever political uncertainty was attributable to Huey Long mattered very little for economic outcomes.