Industrial policy--United States

Government policies can reduce or increase wealth. Some governmental actions are explicit, such as the collection of taxes or fees. The effects of other actions are less apparent, such as safety regulations or meat inspection standards. Specific governmental policies were matched to related industry groups who would seem affected by the action. The stock values for each of the industrial groups were analyzed using a time series methodology. The data for the investigation came from the actual stock prices at weekly checkpoints over a two year period. Each group has a total stock value and the matching Dow Jones Industrial Average for each time period. Forecast values are compared to actual values for the critical periods previous to and following the pronouncement of the policy. The results are compared on a case by case basis within each industry, and an aggregate conclusion was drawn based on all five industries. Overall, the short term outcome reflected stock market reaction which caused most values to decrease from the news. Long term values were restored for the most part in relation to the total stock market behavior as represented by the Dow Jones Industrial Average. The intent of the research was to measure wealth changes as a result of governmental policy pronouncements. The capital values of the stock market provided a means of measuring wealth. While this paper did not intend to provide investment insight, one can conclude that short term downturns from some governmental policies are short term in nature. A savvy investor may be able to outperform the market average using such downturns as a strategic investment point.