1 Business and Economics Journal, Volume 2010: BEJ-1 Stock Market and Economic Growth: An Empirical Analysis for Germany

This paper investigates the causal relationship between stock market development and economic growth for Germany for the period 1965-2007 using a Vector Error Correction Model (VECM). The purpose of this paper was to examine the long-run relationship between these variables, applying the Johansen co-integration analysis based on the classical unit roots tests. The results of Granger causality tests indicated that there is a unidirectional causality between stock market development and economic growth with direction from stock market development to economic growth