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Hope, Change, and Financial Markets: Can Obama's Words Drive the Market?

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  • Sazedj, Sharmin
  • Tavares, José

Abstract

Barack Obama’s victory in the 2009 presidential elections in the United States is widely credited to his personal charisma and his extraordinary rhetorical powers, as revealed throughout the campaign. President Obama was inaugurated in the midst of the worst economic crisis in the country, when individuals and organizations yearned for leadership and signs of change. We code an array of rhetorical features in Obama´s main speeches and press conferences and assess their impact on stock returns of the Dow Jones, S&P 500, and NASDAQ indices, at 3 and 7 day time horizons. We find that words matter. Paragraphs matter, too. We also uncover how some of Obama´s rhetorical abilities that are politically effective seem to be perceived negatively by economic agents, and have a significant negative impact on stock returns.

Suggested Citation

  • Sazedj, Sharmin & Tavares, José, 2011. "Hope, Change, and Financial Markets: Can Obama's Words Drive the Market?," CEPR Discussion Papers 8713, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8713
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    References listed on IDEAS

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    Cited by:

    1. Philipp Mohl & David Sondermann, 2013. "Has political communication during the crisis impacted sovereign bond spreads in the euro area?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(1), pages 48-61, January.

    More about this item

    Keywords

    Barack Obama; financial markets; political economy; speech content;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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