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Research on the Relationship between BRIC’s Stock Market Fluctuations and Economic Growth

Author TaoHui
Tutor ZhangYanLiang
School Shandong University of Finance and Economics
Course Finance
Keywords BRIC Countries Stock Market Volatility Economic Growth Granger Causality Test
Type Master's thesis
Year 2014
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Stock market volatility and economic growth has been the main purpose of scholars athome and abroad. Study of the relationship between BRIC’s stock market volatility andeconomic growth has a very important significance. On the one hand, through studying wecan observed the role of stock market volatility in the process of economic growth and howmuch influence does the development of the national economy have on the stock marketvolatility. On the other hand through analysis of stock market volatility we can manage thestock market, and we can make it better for the sustainable economic development. Moreimportantly, the BRIC countries and other markets can take effective measures to prevent arange of issues like ups and downs of economic and stock market volatility.This article will analyze the relationship between BRICS stock market volatility andeconomic growth by using empirical methods. I will research the relationship betweenstock market volatility and economic growth with the combination of theory and practice.And I will analysis the relationship between them by using econometric methodsThrough empirical analysis, we get the following conclusions: China and Russia’sstock market volatility and economic growth didn’t have the long-term equilibriumrelationship. But India, Brazil and South Africa’s stock market volatility and economicgrowth have the long-term equilibrium relationship. Indian stock market have a strongmotivation to return from a non-equilibrium state to equilibrium when it have a deviationfrom equilibrium.This article has five parts. It starts on the basis of reading a lot of literature andsummarized those literature. By reading I grasp the scholars’ research methods andconclusions, and determined my research perspective. Then I analyzed the theory of stockmarket volatility and economic growth theory with the background of BRIC countries.By using the method of linking theory with practice, I take the empirical test betweenthe five countries’ economic growth and stock market volatility. And analyze the reasonswhy they have or have not long-run equilibrium. Finally, I draw conclusions and putforward policy recommendations, so that the significance of this study is carried out.

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