Forthcoming
Article
Review of Financial Studies

Stock Market Stimulus

By: Robin Greenwood, Toomas Laarits and Jeffrey Wurgler

Format:Print

Abstract

We study the stock market 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 U.S. checks appear to have increased retail buying and share prices of retail-dominated portfolios. The Hong Kong payments increased overall turnover and share prices on the Hong Kong Stock Exchange. 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.

Keywords

Stock Market; COVID-19 Pandemic; Fiscal Stimulus; Stimulus Payments; Impact; Stocks; System Shocks; Price; Spending; United States; Hong Kong

Citation

Greenwood, Robin, Toomas Laarits, and Jeffrey Wurgler. "Stock Market Stimulus." Review of Financial Studies (forthcoming). (Also NBER Working Paper Series, No. 29827, January 2023.)