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    Why the US stock market is less volatile during wars

    An NBER research paper explains the puzzle of wars leading to lower market volatility by relating it to higher defence spending

    Manas Chakravarty
    March 24, 2022 / 09:41 AM IST
    Why the US stock market is less volatile during wars

    Why, despite the war in Ukraine having ratcheted up economic uncertainty severely, are the equity markets relatively calm? The CBOE Volatility Index, for instance, is not particularly elevated. This is not the first time that this has happened. In 1989, a research paper identified what it called ‘The Volatility Puzzle’ in US markets. The paper, by G William Schwert, published in the Journal of Finance, said that despite the increase in uncertainty and economic volatility during wars, stock market volatility...

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