October 01, 2019

Opinion | The economic consequences of Trump’s Twitter-happy ways

In this article for Mint, Niranjan Rajadhyaksha examines how Trump's use of social media to fire missives has driven policy and economic uncertainty in the US to record highs. 


Excerpts below: 


"Trump has produced more than 10,000 tweets since moving into the White House, and economic issues have become more important in recent months. Tweets about the ongoing trade war with China obviously dominate his handle, though Trump has of late also shifted some of his attention—and ire—to the US Federal Reserve for its refusal to bring down interest rates as rapidly as he wants the central bank to.


His frequent Twitter missives have thus had a deeper economic impact than providing source material for late night comedy shows. Financial markets have moved based on what Trump tweets." 


The article also discusses the economic policy uncertainty due to the erratic tweeting:


"Consider a recent paper published by the National Bureau of Economic Research by Steven J. Davis of the University of Chicago, who is part of a team that has developed a policy uncertainty index based on the frequency with which certain keywords are used in newspaper reports. This index tends to spike around big political, economic and strategic events. The past decade has seen some of the highest levels of US economic policy uncertainty in six decades."


Read the complete article here

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