Does more stringencies in government policies during pandemic impact stock returns? Fresh evidence from GREF countries, a new emerging green bloc

• Published in: Resources policy Vol. 76; p. 102582
• Main Authors: Gu, Jianqiang, Yue, Xiao-Guang, Nosheen, Safia, Naveed -ul-Haq, Shi, Lei
• Format: Journal Article
• Language: English
• Published: England Elsevier Ltd 01.06.2022; Elsevier Science Ltd
• Subjects: Closure; Coronaviruses; COVID-19; COVID-19 diagnostic tests; Economic development; Economic growth; Economic models; Economic policies; Economic policy; Emerging green bloc; Government; Government stringency; GREF; Impact analysis; Income support; Indexes; Pandemics; Panel data; Policies; Positive life events; Public events; Public policy; Regions; Stock returns; Sustainable development; Workplaces; COVID-19; Economic policies; C58; Stock returns; G15; Government stringency; Emerging green bloc; GREF; G18
• ISSN: 0301-4207; 1873-7641
• DOI: 10.1016/j.resourpol.2022.102582

In this paper, we investigate the impact of the government economic policies in addition to the more stringent Covid-19 policies on stock index returns of GREF countries, that is, a new economic bloc of 5 countries (Pakistan, Iran, Turkey, Russia, and China) to foster for sustainable development of the region. Using the Panel, ARDL model and data for index returns and economic and Covid-19 control policies for the period March 1, 2020–June 30, 2021, results show that Income support, workplace closure, stringency index, and cancellation of public events have a significant positive impact on the stock index returns over the long run. In contrast, school closure, restriction on public gatherings, and international travel control policies negatively impact stock returns. In comparison, Debt policies, Covid-19 testing policies, health index, and face-covering policies remain insignificant. In the short run, stringent index and face-covering policies remain positively significant. Results of the study suggest significant policy implications that can help reform economic and Covid-19 control policies and promote the region's economic growth over the long-run period. •We investigate the impact of stringent Covid-19 policies on stock index returns.•We also explore government economic policies on stock index returns.•We applied advanced econometric techniques for analysis.•The results show that stringency index positively impacts the stock index returns.•In contrast, international travel control policies negatively impact stock returns.