Do elections bring optimism?

• We examine the effects of elections on economic sentiment.
• Elections increase significantly economic sentiment.
• The increase is short lived.

The purpose of this paper is to examine the effect of elections on economic sentiment. Using monthly data from 14 EU countries over the 1985–2011 period, we show that there is a significant improvement, statistically and economically, of sentiment of the month that elections take place, but this effect is rather short lived, lasting on average less than two months.