Government Interventions During a Crisis: An Event Study of the Extraordinary Budget Announcements' Effect on the Swedish Stock Market
Sammanfattning: The impact of several stimulus packages implemented by the Swedish government during the COVID-19 pandemic on the Swedish stock market is studied in this paper. An event study methodology is used to investigate the abnormal returns of Swedish firms during four announcements related to the stimulus packages. We discovered no significant results on an aggregate level among three separate stimulus packages. Our findings, on the other hand, show that the stimulus package related to short-term layoffs had a significantly positive impact on returns of sectors affected severely in terms of lost net sales by the COVID-19. Furthermore, because we looked at fiscal policy changes in the context of a high degree of market uncertainty, our research is relevant to the literature on investor behavior during a period that featured a high level of uncertainty. Finally, our study provides a contribution to the literature focusing on the effect of fiscal policy changes on asset prices.
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