A Positive Study Of The Relation Between Stock Market And Economic Increase

The depression of the stock market going with rapid economic growth making people suspect the function of stock market. The analysis about the relationship between economic growth and stock market attracts more and more researchers so far. Since recent years, economic growth deviates from the fluctuation of the stock market's basic index. Up till now, there are dispute between academicians. Some claim that stock market have the advantage of collecting the social funds, so have benefit to economic growth; but others retain that there are little relation between stock market and economic growth through the positive study, even the stock market fluctuation deviates from economic growth. Now, this paper is a positive study of the relation between stock market and economic increase based on the data from January 1991 to December 2005, which is long time series. On the stock market, the author choose the return, current value, total value, and the number of corporation; on the economic increase, the author grasp the industry augment value and index of economic prosperity. According to the co-integration method and Granger cause test, and the error correct model to analyze the relationship, come to the conclusion that there are co-integration relation between stock market development and economic increase, in the other words, there are correct system in the stock market. If the fluctuation made it deviate the equilibrium, there are inherence system will correct it close with the equilibrium. But through the Granger test and error correcting model (ECM), stock market show negative Granger cause with the index of economic prosperity. So the key analyse following is what is the logic of the phenomenon, it is only the data trap or have the inherence reason? Consequently, the paper will explore the reasons about the deviate from the stock market to economic increase, and then give some proposals.