THE IMPACT OF MACROECONOMIC VARIBLES ON STOCK MARKET PERFORMANCE: EVIDENCE FROM HIGH INCOME COUNTRIES

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.