Stock Prices and Economic Activity in the Time of Coronavirus

40 Pages Posted: 19 Oct 2020 Last revised: 16 Jun 2021

See all articles by Steven J. Davis

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER); Hoover Institution

Dingqian Liu

American University - Department of Economics

Xuguang Simon Sheng

American University

Multiple version iconThere are 2 versions of this paper

Date Written: June 15, 2021


Stock prices and workplace mobility trace out striking clockwise paths in daily data from mid-February to late May 2020. Global stock prices fell 30 percent from 17 February to 12 March, before mobility declined. Over the next 11 days, stocks fell another 10 percentage points as mobility dropped 40 percent. From 23 March to 9 April, stocks recovered half their losses and mobility fell further. From 9 April to late May, both stocks and mobility rose modestly. This dynamic plays out across the 35 countries in our sample, with notable departures in China, South Korea, and Taiwan. The size of the global stock market crash in reaction to the pandemic is many times larger than a standard asset-pricing model implies. Looking more closely at the world’s two largest economies, the pandemic had greater effects on stock market levels and volatilities in the U.S. than in China even before it became evident that early U.S. containment efforts would flounder. Newspaper-based narrative evidence confirms the dominant – and historically unprecedented – role of pandemic-related developments in the stock market behavior of both countries.

Keywords: stock prices, economic activity, coronavirus, COVID-19, lockdowns, China

JEL Classification: E32, E44, E65, G12, G18, I18

Suggested Citation

Davis, Steven J. and Liu, Dingqian and Sheng, Xuguang Simon, Stock Prices and Economic Activity in the Time of Coronavirus (June 15, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-156, Available at SSRN: or

Steven J. Davis (Contact Author)

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Xuguang Simon Sheng

American University ( email )

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