Impacts of Macroeconomic Variables on the U.S. Stock Market Index and Policy Implications
This paper finds that the U.S. stock market index is positively associated with real GDP, stock earnings, the trade-weighted nominal effective exchange rate, and the U.K. stock market index and negatively influenced by the government debt/GDP ratio, the M2/GDP ratio, the real Treasury bill rate, the real corporate bond yield, the expected inflation rate, and the U.K. Treasury bill rate. The choice of an appropriate exchange rate may affect empirical outcomes. Hence, we need more economic growth and better earnings to have higher stock prices. The rising government debt/GDP ratio is expected to hurt stock prices whereas the relatively low interest rate would help stock prices. A higher M2/GDP ratio reduces stock prices partly due to its potential impacts on inflation and interest rates. The recent depreciation of the U.S. dollar would work unfavorably to the U.S. stock market index.
Volume (Year): 31 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| |
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-11-00038. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.