Does this in any way tell us how to solve the Eurozone crisis?14 February, 2012, 1:20. Posted by Zarathustra
Tags: ECB, European Central Bank
Perhaps folks in the ECB have too much time even with the Eurozone crisis not yet solved, perhaps it is just meant to be a little humour, researchers at the ECB realised that people trade less during the World Cup.
Via the ECB:
At the 2010 FIFA World Cup in South Africa, many soccer matches were played during stock market trading hours, providing us with a natural experiment to analyze fluctuations in investor attention. Using minute‐by‐minute trading data for fifteen international stock exchanges, we present three key findings. First, when the national team was playing, the number of trades dropped by 45%, while volumes were 55% lower. Second, market activity was influenced by match events. For instance, a goal caused an additional drop in trading activity by 5%. The magnitude of this reduction resembles what is observed during lunchtime, and as such might not be indicative for shifts in attention. However, our third finding is that the comovement between national and global stock market returns decreased by over 20% during World Cup matches, whereas no comparable decoupling can be found during lunchtime. We conclude that stock markets were following developments on the soccer pitch rather than in the trading pit, leading to a changed price formation process.
So here’s how to solve the Eurozone crisis: have World Caup everyday, 24 hours a day, 5 days a week, until the Eurozone mess is over, so everyone just watch football and no one cares about what’s going on with euro, so Greece will surely default just fine.
Of course, this is only a joke.