Do Stock Markets Promote Economic Growth

One of the most enduring debates in economics is whether financial development causes economic growth or whether it is a consequence of increased economic activity. Little research into this question, however has used a true causality framework. This paper fills this lacuna by using Granger-causality tests to provide evidence of a positive and significant causal relationship going from stock market development to economic growth, particularly for less developed countries.http://deepblue.lib.umich.edu/bitstream/2027.42/39652/3/wp267.pd