Abstract:
Purpose- The objective of the study is to empirically analyze the role of monetary policy
on stock market performance of high-income countries.
Methodology/sample- The study has aimed to gather data of 21 high-income countries
from 1990 to 2017. Data were gathered from World Development Indicator (WDI) and
TCData360 on annual basis. The study has employed panel cointegration analysis.
Hausman test for misspecification, pooled OLS analysis and Granger causality test.
Findings- Real effective exchange rate, industrial production index and exports have
stock market performance. Moreover,statistically significant but negative impact on
imports, natural logarithm of GDP and inflation have statistically significant and positive
impact on stock market performance. However, real interest rate has been found negative
but statistically insignificant in relation with stock market performance.
Practical Implications- Policy makers can increase
minimizing the exchange rates through promoting the remittances or foreign direct
investments as well. Secondly, it is suggested to work efficiently and effectively, with
intention of cost cutting and maximizing the profits of the organizations.
