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Revisiting Linkages between Stock Prices and Real Activity in OECD Countries: Does Finance Respond to Changing Situation of Economy?

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  • Mercan Hatipoglu

Abstract

The purpose of this study is to investigate whether financial markets contribute to the eco-nomy when needed. The quantile regression model and causality in variance tests are applied to monthly data from December 1989 to July 2016 for 19 OECD economies. The results confirm that the response of capital markets to economic growth depends more on the state of the economy than the state of the country's development. Generally, interaction between financial markets and the economy is weak in OECD countries except Japan and Estonia.

Suggested Citation

  • Mercan Hatipoglu, 2020. "Revisiting Linkages between Stock Prices and Real Activity in OECD Countries: Does Finance Respond to Changing Situation of Economy?," Prague Economic Papers, Prague University of Economics and Business, vol. 2020(1), pages 105-126.
    • Handle: RePEc:prg:jnlpep:v:2020:y:2020:i:1:id:707:p:1-20
    DOI: 10.18267/j.pep.707
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    More about this item

    Keywords

    stock market; economic growth; quantile regression;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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