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COVID-19: Tail Risk and Predictive Regressions

Walter Distaso, Rustam Ibragimov, Alexander Semenov, Anton Skrobotov

arXiv 5 Sep 2020 · Econometrics · publishedPLoS ONE (2022) · 1 citations (OpenAlex)

arXiv:2009.02486 · PDF · DOI · OpenAlex · Extracted main text

Abstract

The paper focuses on econometrically justified robust analysis of the effects of the COVID-19 pandemic on financial markets in different countries across the World. It provides the results of robust estimation and inference on predictive regressions for returns on major stock indexes in 23 countries in North and South America, Europe, and Asia incorporating the time series of reported infections and deaths from COVID-19. We also present a detailed study of persistence, heavy-tailedness and tail risk properties of the time series of the COVID-19 infections and death rates that motivate the necessity in applications of robust inference methods in the analysis. Econometrically justified analysis is based on heteroskedasticity and autocorrelation consistent (HAC) inference methods, recently developed robust $t$-statistic inference approaches and robust tail index estimation.

Citation extraction

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Ibragimov, Ibragimov \ Walden (2015) Heavy-Tailed Distributions and Robustness in Economics and Finance, Vol1.000213100%
IMunmatched citation key IM0.874122100%
IM1unmatched citation key IM10.874122100%
4Cont (2001) `Empirical properties of asset returns: Stylized facts and statistical issues', Quantitative Finance 1, 223–2360.87452100%
5Beare \ Toda (2020) `On the emergence of a power law in the distribution of COVID-19 cases', Physica D: Nonlinear Phenomena 4120.73732100%
6Embrechts, Klüppelberg \ Mikosch (1997) Modelling Extremal Events: For Insurance and Finance, Vol. 33 of Applications of Mathematics, Springer0.69391100%
7Gabaix \ Ibragimov (2011) `Rank-1/2: a simple way to improve the OLS estimation of tail exponents', Journal of Business & Economic Statistics 29, 24–390.69371100%
8Gabaix (2009) `Power laws in economics and finance', Annual Review of Economics 1, 255– 2930.69361100%
9Stock \ Watson (2006) Introduction to Econometrics, 2nd edn, Pearson0.64441100%
10Müller \ Wang (2017) `Fixed-$k$ asymptotic inference about tail properties', Journal of the American Statistical Association 112, 1334–13420.64422100%

Showing the top 10 of 43 scored citations. 2 of these could not be matched to a bibliography entry, so only the citation key is shown.