The Unprecedented Stock Market Reaction to COVID-19
Economics Working Paper 20112
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Economics Working Paper 20112
No previous infectious disease outbreak, including the Spanish flu, has impacted the stock market as powerfully as the Covid-19 pandemic.
As the novel coronavirus (COVID-19) spread from a regional crisis in China’s Hubei province to a global pandemic, equities plummeted and market volatility rocketed upwards around the world.
No previous infectious disease outbreak, including the Spanish Flu, has impacted the stock market as powerfully as the COVID-19 pandemic. We use text-based methods to develop this point with respect to large daily stock market moves back to 1900 and with respect to overall stock market volatility back to 1985. We also argue that policy responses to the COVID-19 pandemic provide the most compelling explanation for its unprecedented stock market impact.
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