Behavioral changes and policy effects during Covid-19

In the new CAMP Working Paper 07/2020, Anundsen, Kivedal, Larsen and Thorsrud exploit unique Norwegian day-by-day transaction and bid-by-bid auction data in order to examine how market participants reacted to the spreading news of Covid-19 in early March 2020, the lock-down on March 12, and the re-opening on April 20. They find that behavior changed voluntarily before the lock-down, and they find effects on the housing market from both the lock-down and the re-opening. In particular, there exists a discontinuity on the date of the lock-down in transaction volumes, sell-prediction spreads, aggressive bidding behavior, and seller confidence. However, when they observed price developments with the estimated counter-factual price developments, they find that roughly half of the total fall in prices had occurred when the lock-down was implemented. The re-opening completely reverses the lock-down effect on prices. They also show that voluntary behavioural changes, as well as lock-down and re-opening effects, are visible in various measures of social mobility, and that changes in daily news sentiment correlate with the abnormal price movements during this period.

One thought on “Behavioral changes and policy effects during Covid-19

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s