Relationships between macroeconomic variables and stock returns essay
The relationship between macroeconomic variables and stock returns has been extensively studied and discussed. This relationship is well illustrated by Miller and Modigliani, 1961's Dividend Discount. In some studies, strong positive relationships are found between stock returns and macroeconomic fundamentals, and in others the relationship is somewhat weak. Other studies report differently. Third, the lead-lag relationships between stock returns and the three macroeconomic variables are all ambiguous. In general, the stock market cannot be used as a “national economic barometer” and the macroeconomic variables contain little predictive power for stock returns from the perspective of the ongoing wave, the Indian subcontinent. Some literature on the relationship between stock prices and various macroeconomic variables in the Indian market such as Agrawalla and Tuteja 2008, Sampath 2011, Kumar. Abstract. This study looks at the complex interactions between key macroeconomic factors, such as the money supply, tax revenues, interest rates and government spending, and how they influence them. The relationship between stock prices and macroeconomic variables is well documented for the United States and other major developed economies, but the relationship between stock prices is well documented. Reveals strong relationships between the above macroeconomic variables and stock returns. Nelson, examined the relationship between monthly stock returns and inflation in the This study examines the relationship between macroeconomic variables and stock market returns using monthly data for the period up to December 2008. The macroeconomic variables used in this study are the consumer price index as a proxy. for inflation, price of crude oil, exchange rate day. Government bond prices as a proxy for,