Talking Trump and tanking markets

Abstract

This study investigates the impact of Trump-related events, measured by the urgency around his mentions in central bank speeches, on volatility in the clean energy market. Using advanced textual analysis, we construct event-related variables and assess their significance through Extreme Bounds Analysis (EBA). Based on the EBA results, we identify Urgency and Commitment as the two key factors, selected from the top and bottom percentiles of robustness rankings. These variables form the basis of an event study framework used to assess the causal impact of policy signals on abnormal market returns This approach enables us to assess not only whether Trump-related policy speeches influence the clean energy market, but also when and under what level of commitment such influence occurs. Importantly, central bank speeches that express high urgency may initially cause uncertainty or caution rather than immediate market action. This delayed response highlights the need to consider both the timing and tone of policy communication when evaluating market reactions.