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The Impact of Monetary and Fiscal Stimulus on Stock Returns During the COVID-19 Pandemic

Author

Listed:
  • Chinmaya Behera

    (Economics and General Management, Goa Institute of Management, Goa, India, (Corresponding author: Goa Institute of Management, Poriem, Sattari, Goa))

  • Badri Narayan Rath

    (Department of Liberal Arts, IIT Hyderabad, Kandi, Sangareddy, India)

  • Pramod Kumar Mishra

    (School of Management, University of Hyderabad, Telangana, India)

Abstract

We contribute to the literature by investing the impact of monetary and fiscal stimulus and exchange rate on stock returns during the COVID-19 pandemic in Australia, China, India, and Indonesia. By employing the machine learning approach, We find that monetary stimulus positively boosts the stock return of Indonesia. Contrary, fiscal stimulus adversely affected stock return in Australia. The exchange rate positively impacts stock return for both India and Indonesia during the COVID-19 pandemic. However, the findings from this study reveal that both monetary and fiscal stimulus have no effect on the stock market return in the case of China and India. Policymakers needs better strategy to counter the extreme events like pandemic. Our model is robust to the alternative model specification.

Suggested Citation

  • Chinmaya Behera & Badri Narayan Rath & Pramod Kumar Mishra, 2023. "The Impact of Monetary and Fiscal Stimulus on Stock Returns During the COVID-19 Pandemic," Working Papers 2023-247, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2023-247
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    More about this item

    Keywords

    Monetary Policy; Fiscal Policy; Stock Return; Machine Learning; COVID-19;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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