Exploring the Role of Government Fiscal Policy in Shaping Financial Market Performance and Investor Confidence
Posted: Mar 08, 2022
Abstract
The intricate relationship between government fiscal policy and financial market dynamics represents one of the most complex and consequential domains in economic research. Traditional approaches to understanding this relationship have predominantly relied on macroeconomic models that treat financial markets as efficient processors of policy information, with investors as rational actors who systematically incorporate fiscal developments into their decision-making calculus. However, the persistent anomalies observed in market responses to fiscal policy announcements, coupled with the growing recognition of behavioral factors in financial decision-making, suggest that conventional frameworks may be insufficient for capturing the full spectrum of policy impacts. This research addresses these limitations by developing an innovative computational methodology that integrates multiple data modalities to provide a more nuanced understanding of how fiscal policy shapes both market performance metrics and the underlying psychological construct of investor confidence.
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