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IBS Speaker Series: Mind the gap! Policy Dissonance and Financial Markets

August 30, 2021 @ 12:00 pm 1:00 pm

Recording of the talk given on 8/30/21 by Andrew Philips.

Zoom link: – email for password.

Andrew Philips Abstract: Scholars regularly connect major violent domestic and international events—like armed conflict, terrorist attacks, natural disasters, and extreme weather—to financial market volatility and negative returns. Yet, major violent events matter to financial markets not simply because of their effect on investor uncertainty about national economies, but also because of their effect on investor uncertainty about government policy reactions to them. We argue that inconsistent government policy reactions to major violent events—something we call event-related “policy dissonance”—raise financial market volatility. Dissonant policy reactions signal the chance of future, unpredictable policy shifts, raising investor uncertainty about the nation’s policy future. We test this argument by examining US government policy discourse during the 2020 Covid-19 pandemic. Sentiment analysis of the corpus of all 1,500 daily public speeches, remarks, announcements, and press briefings made by US President Donald J. Trump during the Covid-19 pandemic shows that pandemic-related policy dissonance raises financial market volatility. Bio: Andrew Q. Philips is an Assistant Professor in the Department of Political Science at the University of Colorado Boulder. He specializes in political economy and methodology. His work has appeared in a number of outlets, including the American Journal of Political Science, Public Choice, Political Science Research and Methods, Stata Journal, and Political Research Quarterly.


August 30, 2021
12:00 pm – 1:00 pm


Program on International Development