Author Description

The Covid-19 Pandemic Prompted Unprecedented Economic Stimulus Worldwide. We Empirically Examine The Impact Of A Withdrawal Of Fiscal Stimulus Policies On The Stock Markets. After Constructing A Database Of Withdrawal Events, We Use Event Study Analysis And Cross-country Regressions To Assess The Difference Between The Pre- And Post-event Stock Price Returns. We Find That Markets React Negatively To Premature Withdrawals—defined As Withdrawals At A Time When The Daily Covid Cases Are High Relative To Their Historical Average—likely Reflecting Concerns About The Withdrawal Impact On The Prospects For Economic Recovery. The Design Of A Successful Exit Strategy From Covid-19 Policy Responses Should Account For These Concerns. Jorge Chan-lau, Yunhui Zhao.