Do U.S. Presidents Matter? Assessing the Impact of Transitional Presidents on Global Geopolitical Risk

Geopolitical risk has become a critical driver of global economic outcomes, influencing financial markets, investment behavior, and cross-border capital flows. While existing research largely focuses on the economic consequences of rising international geopolitical risk, less attention has been given to its political origins. Given the importance of US leadership to international and hemispheric relations and policies, this paper examines the role of U.S. presidential transitions—particularly shifts between Republican and Democratic administrations—as a source of global geopolitical risk. We employ a multi-method empirical strategy that combines difference-in-differences and dynamic event study models, leveraging narrowly contested elections to strengthen causal identification. Our findings show that consistent with the “honeymoon effect”, geopolitical risk increases significantly globally in the first year following a presidential transition, with stronger effects observed during transitions from Democratic to Republican administrations. Consistent with learning and policy stabilization dynamics, this effect dissipates over time. We further document substantial cross-country heterogeneity: economies with stronger trade ties to the United States and higher natural resource dependence are more exposed to transition-induced shocks, while institutional quality mitigates these effects. Overall, the results highlight U.S. political cycles as a key source of global geopolitical risk and provide new evidence on the international transmission of politically driven uncertainty.