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Econometrics of the Effects of Stock Market Development on Growth and Private Investment in Lower Income Countries

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  • J Benson Durham

Abstract

Recent literature suggests that stock market liberalisation has positive effects on macroeconomic growth and private investment. However, econometric relations are largely dependent on the inclusion of higher income countries in such samples, which quite conceivably limits the relevance for lower income nations. Indeed, some evidence in this study indicates that stock market development has a more positive impact on growth for greater levels of per capita GDP. Similarly, lagged equity price appreciation seems to boost private investment growth, but only in rich countries. Curiously, neither financial nor legal development variables, which are more serviceably relevant than initial income, seem to be mitigating factors, but these data imply subdued enthusiasm regarding emerging equity market development.

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Paper provided by Queen Elizabeth House, University of Oxford in its series QEH Working Papers with number qehwps53.

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Handle: RePEc:qeh:qehwps:qehwps53

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  20. J Benson Durham, . "Emerging Stock Market Liberalisation, Total Returns, and Real Effects: Some Sensitivity Analyses," QEH Working Papers qehwps51, Queen Elizabeth House, University of Oxford.
  21. Durham, J Benson, 1999. " Economic Growth and Political Regimes," Journal of Economic Growth, Springer, vol. 4(1), pages 81-111, March.
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Cited by:
  1. J. Benson Durham, 2001. "The effect of monetary policy on monthly and quarterly stock market returns: cross-country evidence and sensitivity analyses," Finance and Economics Discussion Series 2001-42, Board of Governors of the Federal Reserve System (U.S.).
  2. J Benson Durham, . "Time-Series Econometrics of the Real and Financial Effects of Capital Flows: Selected Cases in Africa and Southern Asia," QEH Working Papers qehwps56, Queen Elizabeth House, University of Oxford.

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