Inflation, War Bonds, and Voter Backlash in the 1950s
Abstract
Abstract We study the role of war bonds and inflation in post-WWII federal elections. After WWII, major bouts of inflation in 1946-48 and 1950-51 depressed the real returns of the bonds sold to households during the war. In a difference-in-differences framework, we find that counties with higher war bond purchases shifted their votes towards the Republican Party in postwar elections. To address the endogeneity of war bond purchases, we use an instrumental variables design, and obtain similar results. Bond ownership raised the saliency of inflation, and the severe rise in prices after the war triggered a backlash against the incumbent Democrats.
Fields of Study & Subjects
Fiscal Policies and Political Economy
Global Financial Crisis and Policies
Monetary Policy and Economic Impact
Publication details
- Journal / source
- The Review of Economics and Statistics
- Publisher
- MIT Press
- Pages
- 1–45
- Publication date
- 14 May 2026
- Language
- EN