Abstract
The motivation behind this study is to empirically examine the casual
relationship between the equity market development and GDP growth
in twenty six emerging market economies over the period of 1995 to
2012.To obtain the reliable results, different econometrical techniques
were used; Correlation analysis to know the causality among the equity
market development (Independent variables) and real GDP growth rate
(dependent variable) and to solve the multicollinearity problem. To
check the stationary properties and solve the endogeneity problem, unit
root ADF - fisher chi-square test and panel Generalized Method of
Moments (GMM) approach were employed. It was found that
significant and positive supply leading hypothesis, uni-directional
relationship between equity market development and real GDP growth.
Beside the macro-economic variables FDI- foreign direct investment
(inflows) and trade openness have significant positive while investment
ratio, exchange rate and inflation showed negative and insignificant
impact on economic growth.
Athar Iqbal, Muhammad Irfan Khan, Samina Riaz. (2017) The Causality between Equity Market Development and Economic Growth: An Egg and Chicken Problem? , Journal of Managerial Sciences, Volume 11, Issue 4.
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