By his words alone: the economic consequences of Rodrigo Duterte

Elain Brianne Balderas, Alyanna Maria Belen Bernardo


Philippine President Rodrigo Duterte has gained worldwide notoriety for his foul-mouthed statements, particularly for his threats directed towards the nation’s largest businesses and their powerful owners. Such pronouncements, which may be mistaken for shifts in government policy, may inadvertently provoke the business sector to react negatively. This paper examines whether President Duterte's negative business-related pronouncements have an appreciable effect on the Philippine Stock Exchange Index (PSEi). We apply an interrupted time series model on PSEi data for the period June 30, 2016 until December 31, 2019 to determine Duterte’s impact on stock prices under six different intervention scenarios. Specifically, we test different classifications of business pronouncements— initial business pronouncements, anti-oligarch statements, personal attacks, and combinations of the three. The results show a significant relationship between Duterte’s negative business-related pronouncements on the PSEi closing price, with the biggest changes occurring during the first times he brought up a particular issue or addressed a certain personality. We aggregated the losses for the period 2018-2019 resulting from these pronouncements. For the five pronouncements, we estimate the combined losses to rise from ₱1 million on the day they were made to ₱47 million within five days and, as the market continues to adjust, up to ₱441 million within ten days. 

JEL classification: C23, G12, G14, G41


political communication, stock markets, efficient market hypothesis, event studies

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