Sunday, May 20, 2007
Iraq War and Stock Markets
I posted an interesting result last night that finds a positive correlation between Egyptian stock market returns and U.S. casualties in Iraq. If we believe that higher U.S. casualties would increase the probability that the U.S. withdraws from Iraq, the result suggests that Egypt may want the U.S. out of Mesopotamia. Buy why? One reason could be that U.S. presence in Iraq is a destabilizing to the region (or at least perceived that way by Egyptian investors). Another could be that Egypt is eyeing for influence in Iraq and is waiting for the US to leave. It would be interesting to estimate correlations for other Mideast markets and Pakistan, Russia and India.
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4 comments:
Could it be that Egypt is clandestinely selling arms to the insurgents in Iraq, and that the positive correlation simply suggests higher sales? In which case, the causality is reversed: higher returns in the Egyptian stock market should predict higher casualties in Iraq!
or, of course, it could be that Egyptians anticipate that more casualties will yield a harsher US response, decimating Iraq, Iran, and Syria, say, and improving Egypt's standing in the region.
I really like when people are expressing their opinion and thought. So I like the way you are writing
How you find ideas for articles, I am always lack of new ideas for articles. Some tips would be great
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