The nCOVID-19 and financial stress in the USA: health is wealth
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The nCOVID‑19 and financial stress in the USA: health is wealth Andrew Adewale Alola1,2 · Uju Violet Alola3,4 · Samuel Asumadu Sarkodie5 Received: 14 August 2020 / Accepted: 30 September 2020 © The Author(s) 2020
Abstract Since its first report in the USA on 13 January 2020, the novel coronavirus (nCOVID-19) pandemic like in other previous epicentres in India, Brazil, China, Italy, Spain, UK, and France has until now hampered economic activities and financial markets. To offer one of the first empirical insights into the economic/financial effect of the COVID-19 pandemic, especially in the USA, this study utilized the daily frequency data for the period 25 February 2020–30 March 2020. By employing the empirical Markov switching regression approach and the compliments of cointegration techniques, the study establishes a twostate (stable and distressing) financial stress situation resulting from the effects of COVID19 daily deaths, COVID-19 daily recovery, and the USA’ economic policy uncertainty. From the result, it is assertive that daily recovery from COVID-19 eases financial stress, while the reported daily deaths from COVID-19 further hamper financial stress in the country. Moreover, the uncertainty of the USA’ economic policy has also cost the Americans more financial stress and other socio-economic challenges. While the cure for COVID-19 remains elusive, as a policy instrument, the USA and similar countries with high severity of COVID-19 causalities may intensify and sustain the concerted efforts targeted at attaining a landmark recovery rate. Keywords COVID-19 pandemic · Daily deaths · Daily recoveries · Economic uncertainty · Financial stress · USA JEL classification C41 · G41 · I1 · I120 · I150 * Samuel Asumadu Sarkodie [email protected] Andrew Adewale Alola [email protected] Uju Violet Alola [email protected] 1
Department of Economics and Finance, Istanbul Gelisim University, Istanbul, Turkey
2
Department of Financial Technologies, South Ural State University, Chelyabinsk, Russia
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Department of Tourism Guidance, Istanbul Gelisim University, Istanbul, Turkey
4
Economics and Management, South Ural State University, Chelyabinsk, Russia
5
Nord University Business School (HHN), Post Box 1490, 8049 Bodø, Norway
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A. A. Alola et al.
1 Introduction With 32,429,965 cases (consisting of over 200 countries and territories) and accounting for the death of 985,823 persons globally as reported by the World Health Organization (WHO 2020) on 26 September 2020, the ravaging effect of the novel coronavirus disease (COVID-19) has remained a global emergency. As of August 2 2020, there were 18,134,224 reported confirmed cases, 695,496 deaths, and 10,690,359 recovered cases— corresponding to 229,023 daily change in confirmed cases, 4287 daily change in deaths, and 136,774 daily change in recovery cases [see Fig. 1] (Lauren 2020). So far, the dreadfulness of the COVID-19 pandemic has further irked global reflection and the imagination of the world’s most devast
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