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Understanding Market Reaction To Covid-19 Monetary And Fiscal Stimulus In Major Asean Countries

Author

Listed:
  • Syed Aun R. Rizvi

    (Lahore University)

  • Solikin M. Juhro

    (Bank Indonesia)

  • Paresh Kumar Narayan

    (Monash Univerisity)

Abstract

In this paper, we examine the effect of fiscal and monetary policy stimulus actions during the COVID-19 pandemic on the stock markets of four ASEAN countries, namely, Indonesia, Singapore, Malaysia, and Thailand. Using time-series regression models, we show the relative importance of monetary and fiscal policies. Our findings suggest that 7-days after the policy announcement, fiscal policies helped cushion financial market losses in Indonesia, Singapore and Thailand. We do not find any robust evidence of policy effectiveness for Malaysia. While our investigation is preliminary it opens an additional avenue for understanding the effectiveness of policy stimulus.

Suggested Citation

  • Syed Aun R. Rizvi & Solikin M. Juhro & Paresh Kumar Narayan, 2021. "Understanding Market Reaction To Covid-19 Monetary And Fiscal Stimulus In Major Asean Countries," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(3), pages 313-334, September.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:3a:p:313-334
    DOI: https://doi.org/10.21098/bemp.v24i3.1690
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    Citations

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    Cited by:

    1. Prabheesh, K.P. & Sasongko, Aryo & Indawan, Fiskara, 2023. "Did the policy responses influence credit and business cycle co-movement during the COVID-19 crisis? Evidence from Indonesia," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 243-255.
    2. Rizvi, Syed Aun R. & Pathirage, Kasun, 2023. "COVID-19 policy actions and inflation targeting in South Asia," Journal of Asian Economics, Elsevier, vol. 84(C).
    3. Chundakkadan, Radeef & Sasidharan, Subash, 2023. "The role of government support on E-commerce and firm innovation during pandemic crisis," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 904-913.
    4. Behera, Chinmaya & Rath, Badri Narayan & Mishra, Pramod Kumar, 2024. "The impact of monetary and fiscal stimulus on stock returns during the COVID-19 Pandemic," Journal of Asian Economics, Elsevier, vol. 90(C).
    5. Behera, Harendra & Gunadi, Iman & Rath, Badri Narayan, 2023. "COVID-19 uncertainty, financial markets and monetary policy effects in case of two emerging Asian countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 173-189.
    6. Wang, Hao & Xu, Ning & Yin, Haiyan & Ji, Hao, 2022. "The dynamic impact of monetary policy on financial stability in China after crises," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    7. Iyke, Bernard Njindan & Maheepala, M.M.J.D., 2022. "Conventional monetary policy, COVID-19, and stock markets in emerging economies," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).
    8. Solikin M. Juhro & Denny Lie & Atet Rizki Wijoseno & Mohammad Aly Fikry, 2022. "Fiscal Policy Stance, Central Bank Digital Currency, And The Optimal Monetary-Macroprudential Policy Mix," Working Papers WP/01/2022, Bank Indonesia.

    More about this item

    Keywords

    Stimulus; Fiscal policy; Monetary policy; Stock returns;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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