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Stock Market Developments and Private Consumer Spending in Emerging Markets
Author:
Mr. Norbert Funke
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Series:
IMF Working Papers
Volume/Issue:
Volume 2002: Issue 238
Language:
English
Publication Date:
01 Dec 2002
DOI:
https://doi.org/10.5089/9781451875751.001
ISBN:
9781451875751
ISSN:
1018-5941
Pages:
23
Keywords:
WP; stock market liberalization; equity price; liberalization dummy; stock price; liberalization effect; liberalization period; Consumption; Stock market; Financial wealth; liberalization year; liberalization impact; Stock markets; Private consumption; Stocks; Emerging and frontier financial markets; Asset prices; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund