Susana Campos-Martins, alumna d PhD in Economics from the School of Economics and Management of the University of Minho, researcher at NIPE, working at the University of Oxford, published the article “Letter: WHO pronouncement needed careful judgment” in the Financial Times, with David F Hendry. Following the article on the relevance of the World Health Organization (WHO) in the Covid-19 pandemic, the authors wrote a letter to the Financial Times about the impact of WHO and its announcements on the financial markets. Using the financial model of geopolitical volatility that Susana Campos-Martins has been developing with Professor Robert F. Engle, they found that for a panel of 32 sovereign debt indices around the world, two of the biggest geopolitical shocks in the sample (1989- 2020) took place on March 9 and 12 of this year. The first corresponds to the imposition of mandatory confinement in Italy and the second follows the WHO announcement of the pandemic on the afternoon of 11 March and President Donald Trump’s speech from the Oval Office later that afternoon. In both cases, the volatilities of the sovereign debt indices were all well above average, which means a vast impact on the financial markets. Had WHO announced the pandemic earlier, as some argue, it could have been a false alarm and resulted in an unnecessary disruption of markets. Decisions of this size and geopolitical nature deserve careful consideration and caution. [source: EEGNEWS]
