Policy, Panic, and Pricing: Stock Market Reactions to COVID-19 Economic and Non-Economic Measures

Abstract

The COVID-19 pandemic prompted an unprecedented range of government interventions, both economic and non-economic, designed to contain the virus and stabilize markets. This study examines how financial markets reacted to these distinct policy categories across major global economies, using event study methodology to analyze stock price movements in response to policy announcements. Findings reveal that while economic measures such as fiscal stimulus and monetary easing generally elicited positive investor sentiment, non-economic measures like lockdowns and travel bans generated more mixed or negative market responses. The study underscores the importance of timing, communication, and policy integration in shaping investor behavior during crises and provides insight into the complex relationship between public policy and market dynamics under high uncertainty.