Stock Market Stimulus

47 Pages Posted: 28 Mar 2022

See all articles by Robin M. Greenwood

Robin M. Greenwood

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Toomas Laarits

New York University (NYU) - Department of Finance

Jeffrey Wurgler

NYU Stern School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2, 2022

Abstract

The stock market crash in March 2020 was followed by a historic rebound, particularly among stocks favored by retail investors. We study the effects of the arrival of the three rounds of “stimulus checks” to U.S. taxpayers and the single round of direct payments to Hong Kong citizens. The first two rounds of payments in the U.S. appear to have increased retail buying and share prices of retail-dominated portfolios. The Hong Kong payments increased overall market turnover and share prices in Hong Kong and mainland Chinese markets, especially in large-cap portfolios. We cannot rule out that these price effects were permanent. The findings raise novel questions about the role of fiscal stimulus in the stock market.

JEL Classification: G11, G12

Suggested Citation

Greenwood, Robin M. and Laarits, Toomas and Wurgler, Jeffrey A., Stock Market Stimulus (March 2, 2022). Available at SSRN: https://ssrn.com/abstract=4048085 or http://dx.doi.org/10.2139/ssrn.4048085

Robin M. Greenwood

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6979 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Toomas Laarits (Contact Author)

New York University (NYU) - Department of Finance ( email )

44 West 4th Street
New York, NY 10012
United States

HOME PAGE: http://sites.google.com/view/toomaslaarits/

Jeffrey A. Wurgler

NYU Stern School of Business ( email )

Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY 10012-1126
United States
212-998-0367 (Phone)
212-995-4233 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~jwurgler/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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