Theoretical and Applied Economics
No. 2 / 2019 (619), Summer
The causality between economic growth and stock market in developing and developed countries: Toda-Yamamoto approach
Cankiri Karatekin University, Turkey
Erol YENER
Cankiri Karatekin University, Turkey
Abstract. There are different hypotheses in the literature used to explain the causality relationship between financial development and economic growth. In this study, the causality relationship between the value of stock markets, which is a dimension of financial development and economic growth has been examined. For this purpose, in order to reveal the possible differences between developed and developing countries, the stock market data and GDP values obtained from different countries are considered. As analysis method, Toda-Yamamoto Granger causality analysis was used for the period of 1998Q1-2017Q4. In conclusion, unilateral causalities from stock market indexes to economic growth are determined in United States, BRICS countries and Turkey. Therefore, the development of stock markets is leading to economic growth. This result is not different in terms of developed and developing countries. The supply-leading hypothesis, which is one of the two economic growth hypotheses with one-way causality, is valid. However the results for Germany indicate the two-way relations. This means that feedback hypothesis is valid for Germany.
Contents
The education and training. Priorities of the European Union
Posted offers in exogenous networks: A theoretical application and experimental results
The role of Japan in the development of emerging markets in Asia. Key lessons learned for China
Empirical examination of the stability of expectations – Augmented Phillips Curve for developing and developed countries
The causality between economic growth and stock market in developing and developed countries: Toda-Yamamoto approach
Government failure vs. Market failure. The implications of incomplete information
Foreign direct investment and total factor productivity in South Asia
The effects of political and financial risks on foreign direct investments to the MENAT countries
Exploring the nexus between macroeconomic variables and stock market returns in Germany: An ARDL Co-integration approach
Income inequalities and economic convergence in CEE countries
Exchange rate regimes and its impact on growth: An empirical analysis of BRICS countries
Dynamics of business cycle and long-term economic growth of Pakistan
Per capita gross domestic product and welfare of Gabonese households: A VAR model with exogenous hypothesis
Co-integration with regime shift between government expenditure and poverty reduction in Algeria
Trade in a two sector endogenous growth model with two accumulating factors
What discriminates the welfare outcomes of children in India. A multiple discriminant analysis in selected states