Stock Market Development and Economic Performance: The Case of Mexico

  • Ramon A. Castillo-Ponce California State University, Los Angeles and Universidad Autónoma de Baja California.
  • Maria De Lourdes Rodriguez-Espinosa Universidad Tecnológica de la Mixteca
  • Edgar David Gaytan-Alfaro Universidad Autónoma de Zacatecas
Keywords: Economic growth, financial markets, efficient market hypothesis, cointegration, common cycles.


We evaluate the association between stock market development and the aggregate economy for the long-run and the short-run. We perform cointegration and common cycle tests considering various stock market indicators, real GDP and industrial production for the Mexican economy. While controlling for structural breaks in the series, we identify the existence of common trends but not common cycles. Specifically, stock market activity and real variables exhibit a positive and significant relationship in the long-run; however, they appear to have different responses to transitory shocks. These results confirm that stock market development is conducive to economic growth.
How to Cite
Castillo-Ponce, R. A., Rodriguez-Espinosa, M. D. L., & Gaytan-Alfaro, E. D. (2015). Stock Market Development and Economic Performance: The Case of Mexico. Economic Analysis Review, 29(1), 41-56. Retrieved from