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The Impact of AIDS-Related News on Exchange Rates in South Africa

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  • Kauffman, Kyle
  • Weerapana, Akila

Abstract

This article focuses on the economic impact of AIDS-related news on exchange rates in South Africa. South Africa's HIV/AIDS infection rates are so high that AIDS is now a macroeconomic problem, not just a public health problem. News about the spread of the disease can therefore have significant effects on financial markets. We collect daily data on the number of news stories about AIDS that appear in the Cape Times from 1998 to 2002 and examine the impact of these news stories on fluctuations in the South African rand-U.S. dollar exchange rate. We find that negative news stories about AIDS have a significant negative effect on the value of the rand but that positive news stories have little or no effect. The findings of the article provide concrete evidence of a channel through which the AIDS pandemic continues to adversely affect macroeconomic conditions in sub-Saharan African countries.

Suggested Citation

  • Kauffman, Kyle & Weerapana, Akila, 2006. "The Impact of AIDS-Related News on Exchange Rates in South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 54(2), pages 349-368, January.
    • Handle: RePEc:ucp:ecdecc:y:2006:v:54:i:2:p:349-68
    DOI: 10.1086/497009
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    Cited by:

    1. Jeffrey Frankel, 2007. "On The Rand: Determinants Of The South African Exchange Rate," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 425-441, September.
    2. Simon Grima & Letife Özdemir & Ercan Özen & Inna Romānova, 2021. "The Interactions between COVID-19 Cases in the USA, the VIX Index and Major Stock Markets," IJFS, MDPI, vol. 9(2), pages 1-19, May.
    3. Letife Özdemir & Ercan OZEN & Simon Grima & Inna RomÄ nova, 2021. "Determining the Return Volatility of Major Stock Markets Before and During the COVID-19 Pandemic by Applying the EGARCH Model," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 68(4), pages 405-419, October.
    4. Ferhan Salman, 2005. "Information, Capital Gains Taxes & New York Stock Exchange," Working Papers 0513, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    5. Kwadwo Boateng Prempeh & Joseph Magnus Frimpong & Newman Amaning, 2023. "Determining the return volatility of the Ghana stock exchange before and during the COVID-19 pandemic using the exponential GARCH model," SN Business & Economics, Springer, vol. 3(1), pages 1-20, January.

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