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Stock Market Development and Economic Growth. Some Evidence for Argentina

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  • Luis Lanteri

    (Central Bank of Argentina)

Abstract

This paper examines the relationship between stock market development and economic growth in case of Argentina's economy. I apply Granger causality and exogeneity tests based on VEC (vector error correction) models with monthly data covering the period 1993:1-2010:8. The results show that the major stock indices of Buenos Aires Stock Exchange Market (MERVAL25 and BURCAP) Granger cause to the estimator of economic activity (EMAE). In turn, both indices could be considered exogenous variables (weak and strong). Both stock indexes may predict future movements of the monthly indicator of economic activity. The results are in line with the theory that states that the development of financial markets impact on economic growth.

Suggested Citation

  • Luis Lanteri, 2013. "Stock Market Development and Economic Growth. Some Evidence for Argentina," BCRA Working Paper Series 201360, Central Bank of Argentina, Economic Research Department.
    • Handle: RePEc:bcr:wpaper:201360
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    File URL: http://www.bcra.gov.ar/pdfs/investigaciones/WP_60_2013e.pdf
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    More about this item

    Keywords

    economic growth; exogeneity; Granger causality; stock market development; VEC models;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • G1 - Financial Economics - - General Financial Markets
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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