This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.

Inequality and Growth: What Can the Data Say?

This thesis investigates the relationship between economic growth and financial development in developing countries over 1988-2001. Previous studies have generally used averaged data, for both developing and developed countries, and inappropriate estimation methods. In an attempt to reach some definitive conclusions, Generalised Method of Moments dynamic estimation is used with a newly collected panel of annual data to assess the relationship. The results show that while banks performance has a negative impact on growth, stock markets positively promote growth. To reach an overall conclusion about the impact of finance on growth and to solve the problems associated with the existence of multicollinearity among the different measures of financial development, principal components analysis is used to generate new, comprehensive measures of financial development. In assessing the link between the new measures and financial development and growth, the results support the existence of an overall positive relationship. The thesis also examines the behaviour of interest rates in developing and industrialised countries using individual and panel unit root tests. The results are sensitive to the choice of the test, country and time unit.

Stock markets, banks and economic growth

In this paper, we exploit a new multi-country historical dataset on public (government) debt to search for a systemic relationship between high public debt level growth and inflation our main result is that whereas the link between growth and debt seems relatively weak at “normal” debt levels, median growth rates for countries with over roughly ninety percent of gdp are about one percent lower than otherwise; average (mean) growth rates are several percent lower . surprisingly,

Growth in a Time of Debt

Interest and Prices: Foundations of a Theory of Monetary Policy

Japan experienced unprecedented recession and deflation for more than 10 years. The Bank of Japan enforced quantitative monetary easing at a level never seen before. One purpose is to influence stock prices for economic recovery. Recently, the Japanese economy has been in recovery, and stock prices have increased. However, there is much dispute over whether quantitative easing has been effective. This paper investigates the relationship between macroeconomic variables and stock prices. Exchange rate is the main target variable and finds that interest rates have not impacted Japanese stock prices but exchange rates and U.S. stock prices have. Furthermore, the Bank of Japan's policy for overcoming recession and deflation has been effective. JEL Classification: F31, G15 Keywords: Exchange rate; Interest rate; Japan; Stock market; U.S.A. I. INTRODUCTION Japan experienced unprecedented recession and deflation for more than 10 years. During that period, Japan enforced very aggressive fiscal policies, and the Bank of Japan (BOJ) performed unprecedented quantitative monetary easing. Since 2001, the BOJ has conducted quantitative easing (Kurihara, 2006). One of the purposes of BOJ's policy seems to be to influence stock prices, although BOJ has not admitted to this purpose. The governor of BOJ has reiterated again and again the importance of increasing the transfer of funds from "safe" to "risky" assets. The quantitative easing policy is related to this purpose. This paper analyzes the relationship between Japanese stock prices and macroeconomic factors. In most developed countries, the most important factor in determining stock prices has been interest rates. However, in Japan, interest rates have been close to zero since the quantitative easing policy was implemented in 2001. The effect of interest rates changes on stock prices seems to have decreased to the point of being negligible. Other macroeconomic factors, such as exchange rates and U.S. stock prices, may affect stock prices. This paper finds that exchange rates and U.S. stock prices have been significant determinants of Japanese stock prices. [FIGURE 1 OMITTED] This paper is structured as follows. The next section provides a theoretical exploration of the relationship between the stock market and other macroeconomic factors. Empirical analysis is followed by the theoretical analysis. Finally, the paper concludes with a brief summary. II. RELATIONSHIP BETWEEN STOCK MARKET AND MACROECONOMIC FACTORS The relationship between stock prices and macroeconomic factors has been discussed all over the world. This paper considers the determinants of 'daily' stock prices in Japan. Daily stock prices are determined by many factors, including enterprise performance, dividends, stock prices of other countries, gross domestic product (GDP), exchange rates, interest rates, current account, money supply, employment, their information and so on. Countless factors have an impact on daily stock prices. It should be also noted that previous studies have used monthly or quarterly data whereas this paper relies on daily data. The factors that influence stock prices change over time. For example, in the 1970s and early 1980s, inflation rates were high, which in turn affected stock prices. However, that inflation rate has been stable since then. In general, since that time, interest rates have continued to have much influence on stock prices. Many studies have investigated the relationship between stock prices and interest rates. Campbell (1987); Cutler, Poterba, and Summers (1989); and Hodrick (1992) showed that short- and long-term interest rates have a modest degree of forecasting power for excess stock returns. Similarly, other studies, such as Campbell and Shiller (1991) and Fama (1984), have shown that the slope of the term structure of interest rates helps to forecast excess stock returns. …

https://www.craig.csufresno.edu/ijb/Volumes/Volume%2011/V114-3.pdf

The relationship between exchange rate and stock prices during the quantitative easing policy in japan

Bitcoin is a cryptocurrency. It is not a legal currency but a private monetary system that manages itself and does not depend on central banks or governments. Since the development of Bitcoin, its trading volume has been increasing largely and rapidly. Some fear the increase in Bitcoin usage as it is quite different from traditional currencies; however, its use is spreading all over the world. This paper examines empirically whether or not weekly price anomalies exist by checking the market efficiency of Bitcoin. The empirical results show that the Bitcoin market is not efficient. However, the empirical results show that Bitcoin transactions are becoming and can become more efficient. The results suggest that Bitcoin returns will be random in the future.JEL classification numbers: E42, E44, E51Keywords: Anomaly, Bitcoin, efficient market

The Market Efficiency of Bitcoin: A Weekly Anomaly Perspective

The day-of-the-week effect in foreign exchange markets: multi-currency evidence

'Information Technology and Economic Development' looks at the effect of information technology on fields such as politics, education, sociology and technology.

/pdf/information-technology-and-economic-development-44euqyw7lu.pdf

Information Technology and Economic Development

Purpose – This paper, using daily data, sets out to present an empirical analysis of the relationship between recent Japanese stock prices and macroeconomic variables under the quantitative easing policy in Japan.Design/methodology/approach – The theoretical framework of the analysis is provided followed by application of the empirical method and analysis of the deterministic elements of stock prices in Japan. Vector error correction method is applied.Findings – The results indicate that interest rates, especially the domestic interest rate, have not impacted Japanese stock prices. Exchange rates also have not been a significant determinant of Japanese stock prices. US stock prices have significantly influenced Japanese stock prices. Moreover, there exists a long‐term stable relationship between Japanese and US stock market prices.Originality/value – The Bank of Japan's monetary policy, especially quantitative monetary easing, has not yet been fully determined. The effect of the policy on stock prices has...

Yutaka Kurihara

Papers

The relationship between exchange rate and stock prices during the quantitative easing policy in japan

The Market Efficiency of Bitcoin: A Weekly Anomaly Perspective

The day-of-the-week effect in foreign exchange markets: multi-currency evidence

Information Technology and Economic Development

Recent stock price relationships between Japanese and US stock markets