International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

Call for Paper Volume 8, Issue 2 (March-April 2026) Submit your research before last 3 days of April to publish your research paper in the issue of March-April.
Submit Research Paper Join as a Reviewer

Plagiarism is checked by the leading plagiarism checker TurnItIn

Call for Paper

Volume 8 Issue 2
March-April 2026

Submit your research paper

Indexing Partners
Academia Advanced Sciences Index Bielefeld Academic Search Engine CiteSeer DRJI Google Scholar Independent Search Engine & Directory Network ISI (International Scientific Indexing) Issuu Mendeley Research Networks
RefSeek ResearcherId - Thomson Reuters ResearchGate Scirus Scribd Semantic Scholar UTeM - Universiti Teknikal Malaysia Melaka Wiki for Call for Papers WorldCat Zenodo

Is There a Measurable Placebo Effect in Policy Announcements?

Author(s) Vyom Gupta
Country India
Abstract This paper tests whether policy announcements generate a distinct "placebo" effect: an incremental same-day reaction beyond what is explained by the news sign (positive or negative) and the time remaining to implementation. We assemble a multi-country event panel with at least 20 positive and 20 negative announcements and track close-to-close equity index returns (basis points) and 10-year sovereign yield changes (basis points), using consumer confidence changes descriptively. The method converts lead time to a behavioral salience weight with an exponential half-life (baseline h=7), estimates a baseline relation Delta M = alpha + beta*(ShockExp*s), and compares residuals for anticipated (long lead) versus unanticipated (short lead) events. Equity responses exhibit a steep baseline slope, yield responses are modest, and unanticipated events show more negative residuals than anticipated events. We operationalize a simple forecasting rule that adjusts the timing-by-sign baseline by class-specific residual means to form ex-ante expectations for announcement-day moves. Results are robust to alternative half-lives, anticipation thresholds, and outlier checks.
Keywords Placebo Effect; Announcement Effect; Policy Announcement; Unanticipated News; Anticipated News; Efficient Markets Hypothesis; Rational Expectations; Informational Efficiency; Market Surprise; Announcement Surprise; Residual Effect; Salience; Salience Kernel; Behavioral Time; Present Bias; Hyperbolic Discounting; Attention Constraints; Rational Inattention; Reference Dependence; Prospect Theory; Loss Aversion; Expectation Formation; Cognitive Biases; Overconfidence; Investor Disagreement; Attention Bottlenecks; Framing Effects; News Salience; Market Reaction; Equity Returns; Sovereign Yields; Consumer Confidence; Event Study; Event Window; Survey Expectations; Market-Implied Expectations; Fed Funds Futures; Eurodollar Futures; OIS Rates; Latent Surprise Factor; Kalman Filter; Principal Components; Path Surprise; Target Surprise; Forward Guidance; Delphic Guidance; Odyssean Guidance; Information Effect; Policy Shock; High-Frequency Data; Intraday Data; Basis Points; Shock Factor; Exponential Half-life; Half-life Parameter; Timing-to-Salience Transformation; Baseline Reaction Model; Ordinary Least Squares; Residuals; Anticipation Classification; Forecasting Rule; Robustness Checks; Sensitivity Analysis; Outlier Handling; Heteroskedasticity; HAC Standard Errors; Newey–West Errors; Vector Autoregression; Impulse Response; External Instrument; Market Volatility; Risk Premium; Equity Risk Premium; Macroeconomic Announcement Premium; Monetary Policy Surprise; Information Rigidity; Media Attention; Overreaction; Underreaction; Drift; Volatility Spike; Market Adjustment; Financial Transmission; Policy Communication.
Field Sociology > Economics
Published In Volume 7, Issue 5, September-October 2025
Published On 2025-10-05
DOI https://doi.org/10.36948/ijfmr.2025.v07i05.56956
View / Download PDF File

Share this



E-ISSN 2582-2160
CrossRef

CrossRef DOI is assigned to each research paper published in our journal.

IJFMR DOI prefix is
10.36948/ijfmr

Downloads
Research Paper Format Copyright Permission Form and Undertaking Form Cover Page Vol 8 Isu 2Cover Page Vol 8 Isu 1Cover Page Vol 7 Isu 6

All research papers published on this website are licensed under Creative Commons Attribution-ShareAlike 4.0 International License, and all rights belong to their respective authors/researchers.

CC-BY-SA Open Access

About IJFMR
Fees & Payment
Current Issue
Publication Archive 		Submit Research Paper
Track Submission Status
Publication Guidelines
Publication Ethics
Peer Review & Plagiarism 		Join as a Reviewer
Editors & Reviewers
Reviewer Referral Program
Get Reviewer Membership Certi. 		Website/Journal Policies
Usage Policy
Content Policies
Privacy Policy
Contact Us +91-9687-828-838 editor@ijfmr.com
Powered by Sky Research Publication and Journals