The purpose of this study is to examine the effect of the Severe Acute Respiratory Syndrome (S.A.R.S.) epidemic on the long-run relationship between China and four Asian stock markets. To this end, we first employ the advanced smooth time-varying cointegration model to investigate the existence of a time-varying cointegration relation among these markets and then employ the difference-indifferences approach to analyse whether or not the S.A.R.S. epidemic impacted the long-run relation between China and these four markets during the period 1998-2008, covering 5 years before and after the S.A.R.S. outbreak. Our results support the existence of a time-varying cointegration relation in the aggregate stock price indices, and that the S.A.R.S. epidemic did weaken the long-run relationship between China and the four markets. Therefore, stockholders and policy makers should be concerned about the influence of catastrophic epidemic diseases on the financial integration of stock market in Asia.

This study applies bootstrap panel causality, proposed by Kónya (2006), to investigate causal link between political uncertainty and stock price for seven OECD countries over the monthly period of 2001.01 to 2013.04. This modeling approach allows us to examine both the cross-sectional dependency and the country-specific heterogeneity. Our empirical results indicate that not all the countries are alike and that the theoretical prediction that stock prices fall at the announcement of a policy change is not always supported. Specifically, we find evidence of the stock price leading hypothesis for Italy and Spain, while the political uncertainty leading hypothesis cannot be rejected for the United Kingdom and the United States. In addition, the neutrality hypothesis was supported in the remaining three countries (Canada, France, and Germany), while the feedback hypothesis, however, is never found.

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Background: The stimulus coupon plan is one of the economic relief plans used to boost Taiwan’s slumping economy in the aftermath of the COVID-19 pandemic outbreak. In order to obtain prior information to understand whether or not the stimulus coupon plan would effectively revive the economy in advance, the purpose of this study is to learn lessons from Taiwan’s consumption voucher scheme initiated during the 2007–2009 global financial crisis through evaluating the effect of the consumption voucher scheme on private consumption expenditure. Methods: The smooth time-varying cointegration analysis was applied to estimate the income elasticity of consumption, indicating the individual’s reaction to consumption vouchers in terms of private consumption expenditure, and then the multiple structural change model was estimated to identify endogenous regime changes of the income elasticity of consumption. Results: We found that the income elasticity of consumption dramatically decreased after 2007Q1, a period that covered the subprime mortgage crisis in 2007–2009 and the time of issuance of the consumption vouchers in 2009. Conclusions: We concluded that Taiwan’s consumption voucher scheme might have had either no or little effect on stimulating the economy, so policymakers should be cautioned concerning the potential ineffectiveness of the stimulus coupon plan in the future.