Do Stock Markets Promote Economic Growth?

Filer, Randall K.; Hanousek, Jan; Campos, Nauro F.

doi:10.2139/ssrn.1535900

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Do Stock Markets Promote Economic Growth?

CERGE-EI Working Paper Series No. 151

22 Pages Posted: 14 Jan 2010

See all articles by Randall K. Filer

Randall K. Filer

City University of New York, CUNY Hunter College - Department of Economics; Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences; University of Michigan at Ann Arbor - The William Davidson Institute; CESifo (Center for Economic Studies and Ifo Institute)

Jan Hanousek

Faculty of Business and Economics, Mendel University in Brno; Centre for Economic Policy Research (CEPR)

Nauro F. Campos

University College London; University of Michigan at Ann Arbor - The William Davidson Institute; IZA Institute of Labor Economics

Date Written: December 2000

Abstract

One of the most enduring debates in economics is whether financial development causes economic growth or whether it is a consequence of increased economic activity. Little research into this question, however, has used a true causality framework. This paper fills this lacuna by using Granger-causality tests and finds little evidence of a causal relationship going from stock market development to economic growth. We do find evidence that stock market development can cause currency appreciation, which may confound studies that use dollar denominated measures of economic growth.

Keywords: stock market, financial development, economic growth, Granger causality

JEL Classification: G, G14, O16, F36

Suggested Citation: Suggested Citation

Filer, Randall K. and Hanousek, Jan and Campos, Nauro F., Do Stock Markets Promote Economic Growth? (December 2000). CERGE-EI Working Paper Series No. 151, Available at SSRN: https://ssrn.com/abstract=1535900 or http://dx.doi.org/10.2139/ssrn.1535900