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Government Policy Response to COVID-19 and Stock Market Return: The Case of Iran

In: Socioeconomic Dynamics of the COVID-19 Crisis

Author

Listed:
  • Sakine Owjimehr

    (Shiraz University)

  • Ali Hussein Samadi

    (Shiraz University)

Abstract

In this chapter, we use four indices showing government intervention in facing COVID-19, including stringency index, government response index, containment and health index, and economic support index. The stock market return of Iran from 22 Feb 2020 to 12 June 2021 is our dependent variable. Using a threshold regression, we show that government intervention indices have different effects on the stock market return in Iran, so that when the growth rate of confirmed cases of COVID-19 is less than 0.06%, government intervention cannot affect the stock market return. However, in a situation with a higher growth rate of confirmed cases of COVID-19, stringency index, government response index, and containment and health index reduce the return, but the economic support index increases return. In summary, first, the impact of government intervention on the stock market in Iran depends on the growth rate of confirmed cases. Second, the government faces a trade-off between citizens’ health and stock market return during the high incidence rate of COVID-19.

Suggested Citation

  • Sakine Owjimehr & Ali Hussein Samadi, 2022. "Government Policy Response to COVID-19 and Stock Market Return: The Case of Iran," Contributions to Economics, in: Nezameddin Faghih & Amir Forouharfar (ed.), Socioeconomic Dynamics of the COVID-19 Crisis, chapter 0, pages 423-439, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-89996-7_19
    DOI: 10.1007/978-3-030-89996-7_19
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    More about this item

    Keywords

    COVID-19; Stock markets; Government policy responses; Iran;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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