The Impact of COVID-19 and Government Intervention on Stock Markets of OECD Countries

Abstract

We study the impact of COVID-19 and various government interventions on the stock market returns of 20 OECD countries from February 1, 2020 to October 1, 2020. We find that stock market returns react significantly negatively to the increase in the number of confirmed cases. The governments’ intervention measures, such as social distancing, testing and contact tracing policies, magnify the negative effect of COVID-19 on stock returns. Our findings have important policy implications.