ABSTRACT
The COVID-19 pandemic has profoundly and negatively impacted the global stock markets. Hence, we investigated the time-varying impact of the COVID-19 pandemic on stock returns during the period from January 27, 2020 to December 23, 2021 using the TVP-VAR-SV model and used G7 countries as our research sample. Our results imply that (i) the spread of the COVID-19 pandemic has a significant negative impact on stock returns, but the impact decreases as the time window increases;(ii) the timeliness, compulsoriness, and effectiveness of anti-epidemic policies implemented by governments are the important adjustment factors for stock returns;(iii) the impact of the early stage of the COVID-19 pandemic on the stock market trend gradually weakens as the intermediate time interval increases. In addition, over time, the duration of the negative impact of the COVID-19 pandemic on the stock returns became shorter, and the recovery rate of the impact became faster;(iv) under the managed floating exchange rate regime, the stock returns changed synchronously with the pressures of exchange rate appreciation and depreciation, and under the free-floating exchange rate regime, the effect of the exchange rate on stock returns was almost zero, while the impact of exchange rate channels in eurozone countries was related to the characteristics of national economies. Thus, governments should make greater efforts to improve the compulsion and effectiveness of epidemic prevention policies and strengthen their control over exchange rate fluctuations to alleviate the negative impact of the COVID-19 pandemic on the stock markets.
ABSTRACT
To cope with the COVID-19 pandemic, the Chinese government initiated a medical resource allocation and assistance mechanism that was characterized as a large-scale and regional mutual approach. Specifically, thirty provinces delivered medical resources (e.g., medical staff, medical supplies, and living materials) to "1+16" cities severely affected by the epidemic within a small amount of time, which solved the dilemma of medical collapse and governance "downtime" in epidemic areas, thereby changing the prevalence curve of the pandemic in China. "Campaign-style" targeted assistance can be interpreted based on the Chinese dual party-government model as well as the governance model of vertical accountability and horizontal competition, drawing from previous experience of normalized "designated assistance." Consequently, paired assistance contributes to intergovernmental situations of decreasing divisibility and increasing cooperation. This study has the potential to bring insights to other countries around the world that are fighting the COVID-19 pandemic.