Public economics

Finance

Psychiatry

Event study

Philosophy

Pathology

Business

Paleontology

Psychology

Economics

Neuroscience

Social distance

Microeconomics

Economic impact analysis

Financial market

Psychological intervention

Globe

Government (linguistics)

Disease

Context (archaeology)

Stock market

Horse

Coronavirus disease 2019 (COVID-19)

Linguistics

Development economics

Infectious disease (medical specialty)

Medicine

Biology

Pandemic

Journal of Behavioral and Experimental Finance

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.

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