scholarly journals Exposure to the COVID-19 Stock Market Crash and Its Effect on Household Expectations

2020 ◽  
pp. 1-45
Author(s):  
Tobin Hanspal ◽  
Annika Weber ◽  
Johannes Wohlfart
Keyword(s):  
Labor Market ◽  
Stock Market ◽  
Investment Decisions ◽  
Working Hours ◽  
Retirement Age ◽  
Stock Market Crash ◽  
Expectation Formation ◽  
Market Crashes ◽  
Labor Market Activity ◽  
Shed Light

We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small effects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households’ expectations about their own wealth and their planned investment decisions and labor market activity. Our findings shed light on the implications of household exposure to stock market crashes for expectation formation.

scholarly journals Statistical properties of the aftershocks of stock market crashes revisited: Analysis based on the 1987 crash, financial-crisis-2008 and COVID-19 pandemic

2021 ◽  
pp. 2250019
Author(s):  
Anish Rai ◽  
Ajit Mahata ◽  
Md Nurujjaman ◽  
Om Prakash
Keyword(s):  
Financial Crisis ◽  
Stock Market ◽  
Stock Price ◽  
Structural Break ◽  
Generalized Pareto Distribution ◽  
Recovery Phase ◽  
Stock Market Crash ◽  
Generalized Pareto ◽  
Market Crashes ◽  
Occurrence Times

During any unique crisis, panic sell-off leads to a massive stock market crash that may continue for more than a day, termed as mainshock. The effect of a mainshock in the form of aftershocks can be felt throughout the recovery phase of stock price. As the market remains in stress during recovery, any small perturbation leads to a relatively smaller aftershock. The duration of the recovery phase has been estimated using structural break analysis. We have carried out statistical analyses of 1987 stock market crash, 2008 financial crisis and 2020 COVID-19 pandemic considering the actual crash times of the mainshock and aftershocks. Earlier, such analyses were done considering absolute one-day return, which cannot capture a crash properly. The results show that the mainshock and aftershock in the stock market follow the Gutenberg–Richter (GR) power law. Further, we obtained higher [Formula: see text] value for the COVID-19 crash compared to the financial-crisis-2008 from the GR law. This implies that the recovery of stock price during COVID-19 may be faster than the financial-crisis-2008. The result is consistent with the present recovery of the market from the COVID-19 pandemic. The analysis shows that the high-magnitude aftershocks are rare, and low-magnitude aftershocks are frequent during the recovery phase. The analysis also shows that the inter-occurrence times of the aftershocks follow the generalized Pareto distribution, i.e. [Formula: see text], where [Formula: see text] and [Formula: see text] are constants and [Formula: see text] is the inter-occurrence time. This analysis may help investors to restructure their portfolio during a market crash.

scholarly journals Co-Movements Of U.S. And European Stock Markets Before And After The 2008 Gloal Stock Market Crash

2015 ◽  
Vol 10 (2) ◽  
pp. 83-98
Author(s):  
Ilhan Meric ◽  
Lan Ma Nygren ◽  
Jerome T. Bentley ◽  
Charles W. McCall
Keyword(s):  
Stock Market ◽  
Stock Markets ◽  
Empirical Studies ◽  
Portfolio Diversification ◽  
Stock Market Crash ◽  
Market Crashes ◽  
Before And After ◽  
European Stock Markets ◽  
Global Stock ◽  
The U.S

Abstract Empirical studies show that correlation between national stock markets increased and the benefits of global portfolio diversification decreased significantly after the global stock market crash of 1987. The 1987 and 2008 crashes are the two most important global stock market crashes since the 1929 Great depression. Although the effects of the 1987 crash on the comovements of national stock markets have been investigated extensively, the effects of the 2008 crash have not been studied sufficiently. In this paper we study this issue with a research sample that includes the U.S stock market and twenty European stock markets. We find that correlation between the twenty-one stock markets increased and the benefits of portfolio diversification decreased significantly after the 2008 stock market crash.

Irving Fisher and Financial Economics: The Equity Premium Puzzle, the Predictability of Stock Prices, and Intertemporal Allocation Under Risk

2007 ◽  
Vol 29 (2) ◽  
pp. 153-166 ◽  
Author(s):  
Robert W. Dimand
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Stock Prices ◽  
Equity Premium ◽  
Stock Market Crash ◽  
Net Worth ◽  
Jones Index ◽  
Market Crashes ◽  
Intertemporal Allocation ◽  
Premium Puzzle

Irving Fisher is renowned as the pundit who declared in October 1929 that stock prices appeared to have reached a permanently high plateau and who, having amassed a net worth of ten million dollars in the boom of the 1920s, proceeded to lose eleven million dollars of that fortune in the crash, which, as John Kenneth Galbraith (1977, p. 192) remarked, “was a substantial sum, even for an economics professor.” Along with the Dow-Jones index, Fisher's reputation for understanding financial markets declined relative to that of Roger Babson, the stock forecaster, amateur economist, and founder of Babson College, who presciently predicted the stock market crash of autumn 1929 (and, with less prescience, the stock market crashes of 1926, 1927, and 1928, and the stock market recovery of 1930). An editorial in The Commercial and Financial Chronicle (November 9, 1929) declared of Fisher: “The learned professor is wrong as he usually is when he talks about the stock market” (quoted by Galbraith 1972, p. 151).

Implications of higher retirement age for the labor market

2017 ◽  
pp. 22-39 ◽  
Author(s):  
M. Ivanova ◽  
A. Balaev ◽  
E. Gurvich
Keyword(s):  
Economic Growth ◽  
Labor Market ◽  
Labor Supply ◽  
Labor Force ◽  
Labor Demand ◽  
Retirement Age ◽  
Demographic Trends ◽  
Men And Women ◽  
Demographic Projections ◽  
The Impact

The paper considers the impact of the increase in retirement age on labor supply and economic growth. Combining own estimates of labor participation and demographic projections by the Rosstat, the authors predict marked fall in the labor force (by 5.6 million persons over 2016-2030). Labor demand is also going down but to a lesser degree. If vigorous measures are not implemented, the labor force shortage will reach 6% of the labor force by the period end, thus restraining economic growth. Even rapid and ambitious increase in the retirement age (by 1 year each year to 65 years for both men and women) can only partially mitigate the adverse consequences of demographic trends.

scholarly journals Self-employment as a stepping stone to better labor market matching: a comparison between immigrants and natives

2020 ◽  
Vol 86 (4) ◽  
pp. 479-501
Author(s):  
Magdalena Ulceluse
Keyword(s):  
Labor Market ◽  
Comparative Analysis ◽  
Labour Force ◽  
Demographic Characteristics ◽  
Labour Force Survey ◽  
Self Employment ◽  
Barriers To Employment ◽  
Labor Market Matching ◽  
Shed Light ◽  
The Eu

AbstractThe paper investigates the relation between overeducation and self-employment, in a comparative analysis between immigrants and natives. Using the EU Labour Force Survey for the year 2012 and controlling for a list of demographic characteristics and general characteristics of 30 destination countries, it finds that the likelihood of being overeducated decreases for self-employed immigrants, with inconclusive results for self-employed natives. The results shed light on the extent to which immigrants adjust to labor market imperfections and barriers to employment and might help explain the higher incidence of self-employment that immigrants exhibit, when compared to natives. This is the first study to systematically study the nexus between overeducation and self-employment in a comparative framework. Moreover, the paper tests the robustness of the results by employing two different measures of overeducation, contributing to the literature of the measurement of overeducation.

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