Working Paper: NBER ID: w29827
Authors: Robin Greenwood; Toomas Laarits; Jeffrey Wurgler
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: No keywords provided
JEL Codes: E62; G00; G14; G38; G4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stimulus checks (H81) | Increased retail buying (L81) |
| Increased retail buying (L81) | Share prices of retail-dominated portfolios (G19) |
| Stimulus checks (H81) | Increased share prices (G19) |
| Stimulus checks (H81) | Increased trading activity (F19) |
| Hong Kong direct payments (F29) | Boosted prices on the Hong Kong Stock Exchange (G19) |
| Hong Kong direct payments (F29) | Increased trading volume on the Hong Kong Stock Exchange (N25) |
| Increased retail buying (L81) | Targeted impact of stimulus funds (H54) |