Christine Botvinnik, Finance & Economics

Advisor: Diego Anzoategui, Economics

This paper examines the effect of Catalan secession on the markets, in particular through changes in stock prices of relevant companies on the day of key events of the movement. It begins by discussing similar studies, including those about Catalonia. Specifically, I examine extant research on separatist movements in other areas and their effects on stock prices, the impact of secession movements on other economic indicators, and the general effect that violent and political conflicts have on the economy. Overall, I find that research suggests that political uncertainty, whether it be due to violent or nonviolent events, has some impact on an economy. This paper concludes with an experimental design on this same question. The design delineates key events of the Catalan secession movement between 2010 and 2015, identifies each as political, violent, or both, and offers a regression equation with stock prices as a dependent variables and the aforementioned designations as dummy variables. Thus, this paper will offer a method for testing if changes in equity markets are due specifically to violent events as opposed to any news regarding the secession movement.