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COVID-19: stock market reactions to the shock and the stimulus

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  • Maretno Agus Harjoto
  • Fabrizio Rossi
  • John K. Paglia

Abstract

Using the WHO announcement on 11 March 2020 and the Federal Reserve Bank announcement on 9 April 2020 as two events that represent the shock and the stimulus, this study finds that COVID-19 caused a negative shock to the global stock markets, especially in emerging markets and for small firms. We find that the US stock market experienced positive abnormal returns from the Fed stimulus compared to other developed countries and emerging markets. We find that the positive abnormal returns from the stimulus were garnered by the US large firms instead of the small firms.

Suggested Citation

  • Maretno Agus Harjoto & Fabrizio Rossi & John K. Paglia, 2021. "COVID-19: stock market reactions to the shock and the stimulus," Applied Economics Letters, Taylor & Francis Journals, vol. 28(10), pages 795-801, June.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:10:p:795-801
    DOI: 10.1080/13504851.2020.1781767
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