A First Look at Brexit and Global Equity Markets

14 Pages Posted: 28 Feb 2017

See all articles by Richard C. K. Burdekin

Richard C. K. Burdekin

Claremont McKenna College - Robert Day School of Economics and Finance

Eric N. Hughson

Claremont McKenna College - Robert Day School of Economics and Finance

Jinlin Gu

Claremont Colleges, Claremont McKenna College, Robert Day School of Economics and Finance, Students

Multiple version iconThere are 2 versions of this paper

Date Written: 2017

Abstract

Global equity markets fell by nearly 5% overall on June 24, 2016 following news of the Brexit referendum result. Although nearly all EU stock market indices experienced additional significantly negative abnormal returns, especially poor performance was registered by the debt-ridden PIIGS group (Portugal, Ireland, Italy, Greece, and Spain). In this paper we identify a systematic tendency for more severe stock market responses to be concentrated amongst countries with higher debt to GDP ratios. This effect endures even after controlling for the degree of openness, EU membership and for being part of the PIIGS group.

Suggested Citation

Burdekin, Richard C. K. and Hughson, Eric N. and Gu, Jinlin, A First Look at Brexit and Global Equity Markets (2017). Applied Economics Letters, Forthcoming; Claremont McKenna College Robert Day School of Economics and Finance Research Paper No. 2925598. Available at SSRN: https://ssrn.com/abstract=2925598

Richard C. K. Burdekin (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth Street
Claremont, CA 91711
United States

Eric N. Hughson

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States
909-607-3664 (Phone)

Jinlin Gu

Claremont Colleges, Claremont McKenna College, Robert Day School of Economics and Finance, Students ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

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