Stock market development and long-run growth

Abstract

The authors empirically evaluate the relationship between stock market development and long-term growth. The data suggest that stock market development is positively associated with economic growth. Moreover, instrumental variables procedures indicate a strong connection between the predetermined component in the long run. While cross-country regressions imply a strong link between stock market development and economic growth, the results should be viewed as suggestive partial correlations that stimulate additional research rather than as conclusive findings. Careful case studies might help identify causal relationships and further research could bedone on the time-series property of such relationships.Economic Theory&Research,Financial Intermediation,Health Economics&Finance,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Financial Intermediation,Achieving Shared Growth,Governance Indicators,Health Economics&Finance