Stock Market Developments and Private Consumer Spending in Emerging Markets

December 1, 2002

Preview Citation

Format: Chicago

Norbert Funke. Stock Market Developments and Private Consumer Spending in Emerging Markets, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Using a panel of 16 emerging markets, the paper finds a small but statistically significant effect of stock market developments on private consumption spending. In the short run, a 10 percent decline in the annual real stock market return is associated with a reduction in real private consumption by around 0.1-0.3 percent on average. There is evidence that the link between stock market fluctuations and private consumption has become stronger during the 1990s as stock markets in emerging economies have broadened and deepened. However, there is no significant evidence that the influence is asymmetric. Stock price declines do not have a different impact on consumption than stock price increases.

Subject: Asset prices, Emerging and frontier financial markets, Financial institutions, Financial markets, National accounts, Prices, Private consumption, Stock markets, Stocks

Keywords: Asset prices, Consumption, Emerging and frontier financial markets, Equity price, Financial wealth, Global, Liberalization dummy, Liberalization effect, Liberalization impact, Liberalization period, Liberalization year, Private consumption, Stock market, Stock market liberalization, Stock markets, Stock price, Stocks, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/238
Stock No:

WPIEA2382002
ISBN:

9781451875751
ISSN:

1018-5941

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