Discussion Paper Details

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

Author(s): Sharmin Sazedj and José Tavares

Publication Date: December 2011

Keyword(s): Barack Obama, financial markets, political economy and speech content

Programme Area(s): Financial Economics and Public Economics

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.

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Bibliographic Reference

Sazedj, S and Tavares, J. 2011. 'Hope, Change, and Financial Markets: Can Obama's Words Drive the Market?'. London, Centre for Economic Policy Research.