Economic impact of government interventions during the COVID-19 pandemic: International evidence from financial markets

Journal article


Ashraf, B. (2020). Economic impact of government interventions during the COVID-19 pandemic: International evidence from financial markets. Journal of Behavioral and Experimental Finance. 27, p. 100371. https://doi.org/10.1016/j.jbef.2020.100371
AuthorsAshraf, B.
Abstract

The outbreak of COVID-19 pandemic came as a rare, unprecedented event and governments around the globe scrambled with emergency actions including social distancing measures, public awareness programs, testing and quarantining policies, and income support packages. In this paper, we examine the expected economic impact of government actions by analyzing the effect of such actions on stock market returns. Using daily data from January 22 to April 17, 2020 from 77 countries, we find announcements of government social distancing measures have a direct negative effect on stock market returns due to their adverse effect on economic activity, while an indirect positive effect through the reduction in COVID-19 confirmed cases. Government announcements regarding public awareness programs, testing and quarantining policies, and income support packages largely result in positive market returns. Our findings have important policy implications, primarily by showing that government social distancing measures have both positive and negative economic impact.

Year2020
JournalJournal of Behavioral and Experimental Finance
Journal citation27, p. 100371
PublisherElsevier
ISSN2214-6350
Digital Object Identifier (DOI)https://doi.org/10.1016/j.jbef.2020.100371
Web address (URL)https://publons.com/publon/37043575/
Publication dates
Online01 Jul 2020
Publication process dates
Accepted29 Jun 2020
Deposited11 Nov 2022
Accepted author manuscript
License
File Access Level
Open
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