Adam Smith Business School

Professor Selva Demiralp, Koç University

'Do financial markets respond to populist rhetoric?'
Thursday 5 May, 2.30pm - 4pm
Zoom online seminar

Register at business-events@glasgow.ac.uk

Abstract

With the global rise in authoritarianism, there has been an increase in political commentaries by the populist leaders that have criticised their central banks in favour of lower interest rates. We analyse the effects of these political pressures on exchange rates, in an exhaustive sample that covers 66 countries with free or floating exchange rates. Exchange rates capture rapid changes in market sentiment. For those countries where a significant exchange rate response is detected, we further investigate the response of bond yields to political commentaries. Utilising Bayesian inference techniques, we offer strong empirical evidence that political commentaries affect both the level and the volatility of exchange rate returns as well as bond yields. The intensity of political pressures and institutional strength play a key role in determining the size of the impact.

Biography

Selva Demiralp is a Professor of Economics at Koç University and Director of the Koç University-TUSIAD Economic Research Forum. She is the recipient of the Yapı Kredi Chair of Economic Research. She was an Economist at the Federal Reserve Board between 2000 and 2005, after which she joined the Economics department at Koç University. Over the past decade, Demiralp had extensive interactions with several central banks, including the Federal Reserve, European Central Bank, and the Central Bank of Turkey. She worked as a consultant for the ECB. Demiralp received highly competitive grants for her research on monetary policy including the European Commission's International Outgoing Fellowship (IOF) as well as numerous grants from the Scientific and Technological Research Council of Turkey (TUBITAK).

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Futher information: business-events@glasgow.ac.uk

First published: 2 May 2022