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The link between stock market development and economic activity has always been the subject of considerable debate in the field of economics and it raises empirical question whether stock market development influences economic activity or whether it is a consequence of increased economic activity. This study attempts to investigate the direction of causality between stock market development and economic growth in the Indian context. Using the cointegration and causality tests for the period June 1991 to June 2013, the study confirms a well defined long-run equilibrium relationship between the stock market development indicators and economic growth in India. The empirical results show bidirectional causality between market capitalisation and economic growth and unidirectional causality from turnover ratio to economic growth in the long-run and short-run. By and large, it can be inferred that the stock market development indicators viz. market capitalisation and turnover ratio have a positive influence on economic growth in India.

This paper employs a quarterly time series to determine the timing of structural breaks for interest rates in USA over the last 60 years. The Chow test is used for investigating the non-stationary, where the date of the potential break is assumed to be known. Moreover, we empirically examined the deviation from an assumed interest rate as given in a standard Taylor rule and consequences on financial sectors. The empirical analysis is strengthened by analysing the rule from a historical perspective and look at the effect of setting the interest rate by the central bank on financial imbalances. The empirical evidence indicates that deviation in monetary policy has a potential causal factor in the build up of financial imbalances and the subsequent crisis where macro prudential intervention could have beneficial effect. Thus, our findings tend to support the view, which states that the probable existence of central banks has been one source of global financial crisis since the past decade.

The countries in the world in the globalized era have faced heterogeneity in challenges in managing their growth factors as well as the stake holders of such growth profiles. The political and economic turmoil of the last two decades around the world have opened the eyes of the consumers, business houses and the governments of different countries to read and follow the economic events. The paper has tried to study the causal relation and interrelationships among different growth factors like the confidence levels of the consumers and business houses, inflation, unemployment like economic factors and governance like non-economic factors over a selection of 17 countries across all continents for the period 1996-2010. Because of limited sources of data we have applied the pooled regression technique to justify our study. Confidence levels of both the consumers and business houses cause the growth rates whereas governance causes growth only under pooled data. But for individual country data we observe that in majority of the countries there are absences of causalities between the variables. It has been observed that pooled annual growth rates of GDP of the countries are significantly related to the business and consumer confidence indexes, unemployment rate, debt ratio and overall governance indicators that shows improvement over the individual country analysis where in majority of the cases there is no significant factor for growth and confidence. By segregating the entire data the study find a few countries where a few variables like BCI, stock prices and governance make significant impact upon growth rates. In majority of the countries BCI is explained by CCI, Stock prices and governance while CCI is explained by stock prices, governance and debt ratio.

This article focuses on the empirical relationship between the United States’ and Japan’s yield spread of interest rates and economic growth in Japan. The yield spread is defined in this article as the difference between the Japanese government bond yield minus the US government bond yield. Some studies have tackled this issue and found a negative relationship between the yield spread and economic growth; however, recent studies have shown no or a weak relationship. This problem has not yet reached consensus in spite of its importance. As the Japanese interest rate has been quite low since the adoption of the zero interest rate policy at the end of 1990s, the situation may change the results. The empirical results show that reliability of yield spread as a leading indicator of output growth exists in Japan; however, term structure of interest rate is not related to output growth.

The link between stock market development and economic activity has always been the subject of considerable debate in the field of economics and it raises empirical question whether stock market development influences economic activity or whether it is a consequence of increased economic activity. This study attempts to investigate the direction of causality between stock market development and economic growth in the Indian context. Using the cointegration and causality tests for the period June 1991 to June 2013, the study confirms a well defined long-run equilibrium relationship between the stock market development indicators and economic growth in India. The empirical results show bidirectional causality between market capitalisation and economic growth and unidirectional causality from turnover ratio to economic growth in the long-run and short-run. By and large, it can be inferred that the stock market development indicators viz. market capitalisation and turnover ratio have a positive influence on economic growth in India.

The countries in the world in the globalized era have faced heterogeneity in challenges in managing their growth factors as well as the stake holders of such growth profiles. The political and economic turmoil of the last two decades around the world have opened the eyes of the consumers, business houses and the governments of different countries to read and follow the economic events. The paper has tried to study the causal relation and interrelationships among different growth factors like the confidence levels of the consumers and business houses, inflation, unemployment like economic factors and governance like non-economic factors over a selection of 17 countries across all continents for the period 1996-2010. Because of limited sources of data we have applied the pooled regression technique to justify our study. Confidence levels of both the consumers and business houses cause the growth rates whereas governance causes growth only under pooled data. But for individual country data we observe that in majority of the countries there are absences of causalities between the variables. It has been observed that pooled annual growth rates of GDP of the countries are significantly related to the business and consumer confidence indexes, unemployment rate, debt ratio and overall governance indicators that shows improvement over the individual country analysis where in majority of the cases there is no significant factor for growth and confidence. By segregating the entire data the study find a few countries where a few variables like BCI, stock prices and governance make significant impact upon growth rates. In majority of the countries BCI is explained by CCI, Stock prices and governance while CCI is explained by stock prices, governance and debt ratio.

This paper employs a quarterly time series to determine the timing of structural breaks for interest rates in USA over the last 60 years. The Chow test is used for investigating the non-stationary, where the date of the potential break is assumed to be known. Moreover, we empirically examined the deviation from an assumed interest rate as given in a standard Taylor rule and consequences on financial sectors. The empirical analysis is strengthened by analysing the rule from a historical perspective and look at the effect of setting the interest rate by the central bank on financial imbalances. The empirical evidence indicates that deviation in monetary policy has a potential causal factor in the build up of financial imbalances and the subsequent crisis where macro prudential intervention could have beneficial effect. Thus, our findings tend to support the view, which states that the probable existence of central banks has been one source of global financial crisis since the past decade.

This article focuses on the empirical relationship between the United States’ and Japan’s yield spread of interest rates and economic growth in Japan. The yield spread is defined in this article as the difference between the Japanese government bond yield minus the US government bond yield. Some studies have tackled this issue and found a negative relationship between the yield spread and economic growth; however, recent studies have shown no or a weak relationship. This problem has not yet reached consensus in spite of its importance. As the Japanese interest rate has been quite low since the adoption of the zero interest rate policy at the end of 1990s, the situation may change the results. The empirical results show that reliability of yield spread as a leading indicator of output growth exists in Japan; however, term structure of interest rate is not related to output growth.