How do government policies and interventions mitigate the negative impacts of stock market fluctuations on the economy?
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Government policies and interventions play a crucial role in mitigating the negative impacts of stock market fluctuations on the economy. Research indicates that government responses, including containment and closure policies, economic support, and health system initiatives, can help alleviate the adverse effects of the COVID-19 pandemic on the capital market . In the Indonesian Stock Exchange, various interventions such as economic stimulus packages, Jakarta lockdowns, and free vaccination campaigns have shown short-term impacts on different industrial sectors, aiding in market recovery and resilience . Efficient financial markets are highlighted as more effective than traditional fiscal interventions in reducing economic volatility, emphasizing the importance of establishing such markets to provide stability during financial stress . Active government intervention in the Chinese stock market has been shown to promote market stability and the return of asset prices to their fundamental values, showcasing the positive impact of strategic interventions .
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17 Aug 2022 | Government policies like economic stimulus packages and free vaccination campaigns can mitigate stock market fluctuations by fostering sector recovery and long-term economic stability, as seen in Indonesia during COVID-19. |
1 Citations | Efficient financial markets are more effective than conventional policies in reducing economic volatility caused by stock market fluctuations, as shown in the research. Government should prioritize building efficient financial markets. |
| Government policies like economic stimulus packages and interventions such as lockdowns and vaccination campaigns can help mitigate negative stock market impacts, aiding economic stability and recovery. | |
| Government responses, particularly containment, closure policies, and economic support, mitigate negative stock market impacts during the COVID-19 pandemic, especially for firms highly exposed to COVID-19 on the sales side. |
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