Affordable Access

'Whatever it Takes' to Change Belief: Evidence from Twitter

Authors
  • Stiefel, Michael
  • Vivès, Rémi
Publication Date
Feb 01, 2019
Source
HAL
Keywords
Language
English
License
Unknown
External links

Abstract

The sovereign debt literature emphasizes the possibility of avoiding a self-fulfilling default crisis if markets anticipate the central bank to act as lender of last resort. This paper investigates the extent to which changes in belief about an intervention of the European Central Bank (ECB) explain the sudden reduction of government bond spreads for the distressed countries in summer 2012. We study Twitter data and extract belief using machine learning techniques. We find evidence of strong increases in the perceived likelihood of ECB intervention and show that those increases explain subsequent decreases in the bond spreads of the distressed countries.

Report this publication

Statistics

Seen <100 times