Stock Market And Economic Growth In Central Eastern European Countries

Sammanfattning: The initial efforts of transformation to market economies in transaction economy countries are to increase tighter links to modern eastern countries and one of the topics is the stock market. Empirical evidence suggests that the stock market can affect the economic growth. On the other hand, economic growth can affect the investments on the stock market by increasing the expectations of future economic growth. In this paper, I explore the possibility of the reverse causality between the stock market and economic growth in fourteen Central Eastern European (CEE) countries during 1998 to 2009. Mixed evidences indicate that the stock market is exogenous and has a positive effect on the economic growth. However, the results are ambiguous because they depend on the measurement of the stock market and the country settings.