Influence of economic policy uncertainty on Panama Stock Exchange prices

Authors

  • Mary Elena Sánchez Gabarre Universidad de La Coruña 
  • Pablo Castellanos García Universidad de La Coruña 
  • Víctor Hugo Herrera Ballesteros Universidad de Panamá

DOI:

https://doi.org/10.7203/IREP.5.1.26979

Abstract

The main objective of this paper is to study the relationship between the benchmark stock market index in Panama and economic policy uncertainty from both a global and a national perspective. In particular, the aim is to analyse this relationship in a novel way in order to find out to what extent economic policy events affect Panamanian stock market movements, adopting as a starting hypothesis that an increase in uncertainty is associated with a decrease in stock market indices, i.e. that the uncertainty-quotation relationship is inverse. To this end, we consider data from January 1997 to December 2020 on a monthly basis. This study is carried out through the decomposition of the time series, as well as the application of the GARCH methodology, since it is the one that allows us to separate the information produced by the variations in prices. The results obtained lead us to conclude that the influence of economic policy uncertainty has a negative effect on the stock prices of Panama's benchmark index.

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Published

2023-07-02

How to Cite

Sánchez Gabarre, M. E., Castellanos García, P., & Herrera Ballesteros, V. H. (2023). Influence of economic policy uncertainty on Panama Stock Exchange prices. International Review of Economic Policy-Revista Internacional De Política Económica, 5(1), 72–88. https://doi.org/10.7203/IREP.5.1.26979
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Vol. 5 No. 1 (2023)

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