The main goal of this paper is to investigate the relationship between stock market development and economic growth in Iran. To this end, the paper using quarterly data from 1998Q1 to 2012Q4 and employing time series methodologies, namely Johansen’s co-integration and Granger causality testing procedures in the context of Vector Error Correction Models (VECM), examine the short and long run dynamics of the relationship. The Johansen test of co-integration suggests that variables are co-integrated and the VECM reveals existence of long running relationship. In addition, the granger causality test showed a two-way causality between stock market and growth in Iran.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode