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Causal Relationship among Stock Markets and Economic Growth in Latin America

Author

Listed:
  • Elena Moreno-García
  • Arturo García-Santillán
  • Sergio Hernández-Mejía
  • Jorge Muñoz-Buendía
  • Daniel Basurto-Romero

Abstract

The aim of this research is to analyze the causal relationship among stock market and economic growth in Latin America, in the case of Mexico, Brazil and Chile. The Granger causality test was utilized in order to analyze the relationship among growth rate and the stock market index of each country, as a reference of economic growth respectively. Consequently a VAR model for each country is designed. The results of research allow to identify unilateral causation in all three cases examined, as well allows to identify that there is causality of stock market toward economic growth.

Suggested Citation

  • Elena Moreno-García & Arturo García-Santillán & Sergio Hernández-Mejía & Jorge Muñoz-Buendía & Daniel Basurto-Romero, 2015. "Causal Relationship among Stock Markets and Economic Growth in Latin America," International Journal of Financial Markets, Research Academy of Social Sciences, vol. 1(4), pages 107-119.
    • Handle: RePEc:rss:jnljfm:v1i4p2
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    References listed on IDEAS

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    1. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    2. Ang, James B. & McKibbin, Warwick J., 2007. "Financial liberalization, financial sector development and growth: Evidence from Malaysia," Journal of Development Economics, Elsevier, vol. 84(1), pages 215-233, September.
    3. Eduardo Walker, 1998. "Mercado Accionario y Crecimiento Económico en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(104), pages 49-72.
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