Stock Market Dynamics and Economic Growth: Empirical Insights from G7 Nations

Sihana Hoxha Shala (), Ardita Bytyqi () and Shenaj Haxhimustafa ()
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Sihana Hoxha Shala: South East European University
Ardita Bytyqi: South East European University
Shenaj Haxhimustafa: South East European University

A chapter in Navigating Economic Uncertainty - Vol. 2, 2025, pp 133-145 from Springer

Abstract: Abstract The primary objective of this paper is to comprehensively examine the intricate relationship between economic growth and stock market capitalization. By employing empirical and theoretical frameworks, this study sheds light on the dynamics at play within this nexus. Focusing specifically on the G7 countries, this research scrutinizes data spanning two decades (2000–2020), mainly focusing on gross domestic product and market capitalization. Through meticulous analysis, the aim is to ascertain the extent to which stock markets act as catalysts for economic advancement or, conversely, whether economic growth propels stock market expansion within these nations. Methodologically, this study employs a regression model that is tested utilizing the STATA software. Drawing upon insights from the theoretical literature, which posits a fundamental linkage between stock market performance, financial development, and economic growth, this paper aims to validate these theoretical assertions through empirical analysis. The anticipated findings will contribute to the theoretical discourse and provide practical insights for policymakers and investors alike. Specifically, the results are expected to affirm that robust and efficient stock markets are intricately intertwined with enhanced economic growth, aligning with theoretical expectations and empirical observations.

Keywords: Stock market capitalization; Gross domestic product; G7 nations (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-73510-3_9

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DOI: 10.1007/978-3-031-73510-3_9

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