COVID-19 Uncertainty and Its Impact on Stock Prices


  • Steven Yao York Suburban High School
  • Jenny Hu York Suburban High School



COVID-19 Uncertainty, Stock Prices, Stock Pricing Model


This paper develops a stock-pricing model to investigate how the COVID-19 induced uncertainty affects stock prices. Through utilizing a series of mathematical techniques and conducting a comparative static analysis, we find that when economic uncertainty intensifies, the future payouts of firms, such as dividend payments to stockholders, tend to diminish, indicating a deterioration of firms’ stability and prospect. As a result, investors expect a reduction in the future payoffs of the stocks issued by firms. Given that the price of a stock reflects the present values of its expected future payoffs, the rising level of COVID-19 uncertainty, which undermines the future payoffs of the stocks that investors expect to receive, decreases stock prices.


Download data is not yet available.

Author Biography

Jenny Hu, York Suburban High School


References or Bibliography

Alfaro I., Bloom, N. & Lin, X. (2018). The finance uncertainty multiplier. NBER Working Paper, No. 24571.

Altig, D., Baker, S., Barrero, J., Bloom, N., et al. (2020) Economic uncertainty before and during the COVID-19 pandemic. Journal of Public Economics, 191.

Baker, S., Bloom, N., Davis, S. & Terry, S. (2020). COVID-induced economic uncertainty. Institute for Economic Policy Research, Working Paper, No. 20-014.

Baker, S., Bloom, N., Davis, S., Kost, K., Sammon, M., & Viratyosin, S. (2020). The unprecedented stock market impact of COVID-19. NBER Working Paper, No. 26945.

Barua, S. (2020). Understanding coronanomics: The economic implications of the coronavirus (COVID-19) Pandemic.

Barro, R., Ursua, J., & Weng, J. (2020). The coronavirus and the great influenza pandemic: lessons from the “Spanish flu” for the coronavirus’s potential effects on mortality and economic activity. NBER Working Paper, No. 26866.

Chen, T., Gozger, G., & Koo, C. (2021). Pandemics and income inequality: what do the data tell for the globalization era? Frontiers in Public Health.

Cochrane, J. (2000). Consumption-based model and overview. In Asset pricing. Princeton University Press.

Dai, P., Xiong, X., Liu, Z., Huynh, T. & Sun, J. (2021). Preventing crash in stock market: The role of economic policy uncertainty during COVID‑19. Financial Innovation, 7 (31).

Giavazzi, F. & McMahon, M. (2012). Policy uncertainty and household savings. The Review of Economics and Statistics, 94(2), 517-531.

Krieger, K., Mauck, N., Pruitt, S. W. (2021). The impact of the COVID-19 pandemic on dividends. Finance Research Letter, 42 (101910). http:// 10.1016/

McMahon, M. (2019). The macroeconomics of uncertainty. In Troeger, V. (Ed.). Which way now? Economic policy after a decade of upheaval. A CAGE Policy Report (pp. 155-161).

Sholichah, F., Asfiah, N., Ambarwati, T., Widagdo, B., et al. (2021). The effects of profitability and solvability on stock prices: Empirical evidence from Indonesia. Journal of Asian Finance, Economics and Business, 8 (3), pp. 885–894. http://

Szczygielski, J. J., Bwanya P. R., Charteris A., & Brzeszczy´nski, J. (2021) The only certainty is uncertainty: An analysis of the impact of COVID-19 uncertainty on regional stock markets. Finance Research Letter, 43.

Walkup, B. (2016). The impact of uncertainty on payout policy. Managerial Finance, 42 (11), pp. 1054–1072. http://doi:10.1108/mf-09-2015-0237

Wang, Q., Bai, M., & Huang, M. (2021). Empirical examination on the drivers of the U.S. equity returns in the during the COVID-19 crisis. Frontiers in Public Health.

Wu, S. (2020). Effects of pandemics-related uncertainty on household consumption: evidence from the cross-country data. Frontiers in Public Health.



How to Cite

Yao, S., & Hu, J. (2022). COVID-19 Uncertainty and Its Impact on Stock Prices. Journal of Student Research, 11(2).



HS Research Articles