COVID-19 lockdowns, stimulus packages, travel bans, and stock returns

This paper examines the effect of government responses of G7 countries to the coronavirus pandemic (COVID-19) on stock market returns. Using time-series data, we show that lockdowns, travel bans, and economic stimulus packages all had a positive effect on the G7 stock markets. However, lockdowns were most effective in cushioning the effects of COVID-19. Our results are robust to different measures of returns and controls for other factors of returns.

Automated summary

This study finds that government responses of G7 countries to COVID-19 have a positive effect on stock market returns, with lockdowns being particularly effective in mitigating the impact of the pandemic.