This is a repository on the causal analysis of the impact PHEIC having on China's economic outlook
According to Wikipedia, a Public Health Emergency of International Concern (PHEIC) is a formal declaration by the World Health Organization (WHO) of "an extraordinary event which is determined to constitute a public health risk to other States through the international spread of disease and to potentially require a coordinated international response".
Recently, WHO just issued its 6th PHEIC in history to China’s recent outbreak of novel coronavirus. While some argue that PHEIC could help curb the epidemic situation as countries become more alarmed of the situation and thus take necessary steps to prevent it from spreading further, others argue that it could cause the economic outlook of infected countries to deteriorate further.
Thus our project aims to discover whether there is any causality between PHEIC and the economic outlook of infected countries and regions.
As the issuance of PHEIC is in the middle of the spreading epidemic, it could be difficult to isolate the effect of PHEIC on economic outlook from the effect of the epidemic and other factors that potentially influence the economy in the long run. Therefore, we decided to focus on events that happen fast and during a short period of time before and after the issuance of the document to minimize the long-term effect that the epidemic has on it.
One thing that always acts fast according to current events is stock price. It represents people’s prospects on the economic outlook to a certain extent. Therefore, we will use this as the key variable in our model to quantify the infected country’s economic outlook. To understand how PHEIC impacts infected countries, the specific causal question we will ask here is how is the issuance of PHEIC affecting the stock price of companies that have a large percentage of revenue from the infected country?
Therefore, we would use a difference-in-differences model. We will select the companies 3 days before and after the issuance on PHEIC for Covid-19 - the date for issuance of PHEIC is January 30.