Are the Markets Afraid of Kim Jong-Il?
We perform event analysis on particular episodes of the tension in the Korean peninsula between 2000 and 2008, and investigate their effect on South Korean financial markets (stock markets, bond yield spreads and the exchange rate) given that South Korea would be the first affected by a military aggression from North Korea. Surprisingly, in nearly all cases, these events, which have often been dramatized in the world media, have no significant impact on either of these variables or only a very small one. We also find no significant impact of events on listed firms that would a priori be likely to suffer from increased tension between the two Koreas. Since financial markets contain often better predictions than expert opinions or surveys, these results strongly suggest that the North Korean threat is non credible.
|Date of creation:||Oct 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501|
Web page: http://www.kier.kyoto-u.ac.jp/eng/index.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Justin Wolfers & Eric Zitzewitz, 2004.
03-025, Stanford Institute for Economic Policy Research.
- Michael Greenstone, 2007. "Is the "Surge" Working? Some New Facts," NBER Working Papers 13458, National Bureau of Economic Research, Inc.
- Salinger, Michael, 1992. "Standard Errors in Event Studies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(01), pages 39-53, March.
- Guidolin, Massimo & La Ferrara, Eliana, 2004.
"Diamonds are Forever, Wars are Not: Is Conflict Bad for Private Firms?,"
CEPR Discussion Papers
4668, C.E.P.R. Discussion Papers.
- Massimo Guidolin & Eliana La Ferrara, 2007. "Diamonds Are Forever, Wars Are Not: Is Conflict Bad for Private Firms?," American Economic Review, American Economic Association, vol. 97(5), pages 1978-1993, December.
- Massimo Guidolin & Eliana La Ferrara, 2006. "Diamonds are forever, wars are not. Is conflict bad for private firms?," Working Papers 2005-004, Federal Reserve Bank of St. Louis.
- Stephan Haggard & Marcus Noland, 2008.
"Famine in North Korea Redux?,"
Working Paper Series
WP08-9, Peterson Institute for International Economics.
- Arindrajit Dube & Ethan Kaplan & Suresh Naidu, 2011.
"Coups, Corporations, and Classified Information,"
NBER Working Papers
16952, National Bureau of Economic Research, Inc.
- Chaney, Eric, 2008. "Assessing pacification policy in Iraq: Evidence from Iraqi financial markets," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 1-16, March.
- repec:reg:rpubli:259 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:kyo:wpaper:789. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ryo Okui)
If references are entirely missing, you can add them using this form.