Review of Long-Run and Short-Run Relationship between Macroeconomic Variables and Stock Prices in Pakistan

The purpose of this study is to describe the relationship between stock returns and macroeconomic variables. In this review paper we write the review of fourteen papers related to the relationship between stock returns and macroeconomic variables. However different papers shown different results but we tried to summarize these results in best manner. Two long run relationships were found. In the long run inflation has a negative relationship with stock returns but industrial production index, real affective exchange rate, and money supply has a positive relationship with stock returns. Keywords: Stock returns, macroeconomic variable