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Causality tests between stock market development and economic growth in West African Monetary Union

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  • ABOUDOU Maman Tachiwou

    (Shanghai University of Finance and Economics, China)

Abstract

This paper examines the causal relationship between stock market development and economic growth for the West African Monetary Union economy over the last decade or so. By applying the techniques of unit–root tests and the long–run Granger non-causality test proposed by Toda and Yamamoto (1995), the causal relationships between the real GDP growth rate and two stock market development proxies are tested. The results are in line with the supply leading hypothesis in the sense that there is strong causal flow from the stock market development to economic growth. A unidirectional causal relationship is also observed between real market capitalization ratio and economic growth.

Suggested Citation

  • ABOUDOU Maman Tachiwou, 2009. "Causality tests between stock market development and economic growth in West African Monetary Union," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(2), pages 14-27, December.
    • Handle: RePEc:rom:econmn:v:12:y:2009:i:2:p:14-27
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    More about this item

    Keywords

    stock market development; economic growth; Toda and Yamamoto causality test; West African Monetary Union;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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