UNM economist publishes article on market efficiency during COVID-19, chosen as a 2021 Women in STEM Award winner
UNM assistant professor of Economics Dr. Jingjing Wang recently published an article on COVID-19 effects on financial market efficiency in the journal Finance Research Letters.
According to her paper, the Covid-19 pandemic caused the market efficiency to decrease in four markets including the SP 500 Index, gold and dollar markets. However, the Bitcoin market hasn’t decreased as much. The paper titled COVID-19 and financial market efficiency: Evidence from an entropy-based analysis explains this observation and how it’s beneficial.
“The first three markets deteriorated the most; meanwhile, Bitcoin also declined but not as much, despite it usually having the worst quality. This suggests that the robustness of the efficiency of the Bitcoin market can be an attractive feature for it to serve as a safe haven asset during extreme shocks like COVID-19,” Wang said.
Wang applies microeconomics in the environment and natural resources to solve real-world questions.
“My research portfolio contains projects under three intertwined themes: dual impacts of agriculture on the environment; water resources management and governance; and quality and performance of agricultural and resource commodity markets.” Wang said.
Unlike her other articles on agriculture and the market, she decided to address the questions regarding the pandemic to learn more about how COVID-19 impacted market efficiency.
“I had previously looked at the performance of agricultural commodity markets so it was natural for me to extend that research line to the context of COVID-19,” Wang said, “Part of the motivation was inspired by the work of my department colleagues on the cost-benefit analysis of Bitcoin mining.”
Wang defines efficiency in the market by understanding asset prices. The efficiency level of a market should remain high since without it markets will be volatile or even collapse.
“If the efficiency level of Bitcoin gets even worse, the market can collapse and even disappear,” Wang said.
Wang was also selected in June as a 2021 Women in STEM Award winner for her work with three other UNM researchers on the project “Perspectives on Innovative Approaches in Agriculture to Managing Water Scarcity.”
Currently, many solutions to water shortages around the world focus on recycling and efficiency in municipal supplies. The collaborative research considers new efforts that could help address water shortages, including innovative and evolving water practices in agriculture.
The Co-PIs are Dr. Caroline Scruggs, an associate professor in Community and Regional Planning; Dr. Melinda Morgan, an associate professor in Geography and Environmental Studies and Alex Webster; a research professor in Biology.