Article

 

Impact of macroeconomic variables on the stock market in Bulgaria and policy implications (p.41-53)

by

Yu Hsing, Southeastern Louisiana University

Keywords : Stock market index, Government deficit, Money supply, Interest rates, Exchange rates, World stock market

JEL classification : E44, E52, E62, G15

Abstract

Applying the GARCH model, this paper finds that the Bulgarian stock market index is positively associated with real GDP, the M2/GDP ratio and the U.S. stock market index and is negatively influenced by the ratio of the government deficit to GDP, the domestic real interest rate, the BGN/USD exchange rate, the expected inflation rate and the euro area government bond yield. Hence, to promote a robust stock market, the authorities are expected to pursue or maintain economic growth, fiscal discipline, moderate increase in the money supply, currency appreciation, and a relatively low interest rate or expected inflation rate.