Growth impact of equity market crises: A global perspective

Chai Liang Huang and Yu Ching Chang

International Review of Economics & Finance, 2022, vol. 78, issue C, 153-176

Abstract: We employ the treatment effect model to examine whether equity market crises are significantly associated with economic growth. By using a variety of indicators of equity market crises, our empirical results show that they have significantly reduced economic growth, especially in developed countries and when the stock market price dropped by 50% or more. This adverse effect was aggravated by the onset of the 2008 global financial crisis. Our empirical results also show that the most important channels of this adverse effect of equity market crises on aggregate growth are consumption and investment.

Keywords: Equity market crisis; Financial crisis; Global financial crisis; Economic growth; Investment (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:78:y:2022:i:c:p:153-176

DOI: 10.1016/j.iref.2021.11.004

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