Stock Market Development and Economic Performance: The Case of Mexico

Ramon A. Castillo-Ponce, Maria De Lourdes Rodriguez-Espinosa, Edgar David Gaytan-Alfaro


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.


Economic growth, financial markets, efficient market hypothesis, cointegration, common cycles.

Full Text:



  • There are currently no refbacks.

2020 © Departamento de Economía
Erasmo Escala 1835 - Santiago, Chile - Teléfono (56-2) 8897356.
Journal of Technology Management & Innovation | Observatorio Económico | Gestión y Tendencias