Inflation and stock market development in Namibia: Evidence from co-integration and error correction modelling
Loading...
Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
University of Namibia
Abstract
The current study looks at the relationship between infl ation and stock market
development in Namibia using modern time series econometric techniques that
of co-integration and error correction modelling. The main results in this paper
indicate that real gross domestic product promote stock market development
in Namibia. More particularly, changes in gross domestic product impacts
positively on market capitalization and the value of domestic shares traded. The
results also indicate that there is a relationship between infl ation and market
capitalization and value of domestic shares traded. However, this relationship
is insignifi cant. The foregoing implies that Namibia should place emphasis on
the policies that promote gross domestic product, because this is benefi cial
for the development of the stock market. Although the relationship between
stock market development indicators and infl ation is insignifi cant, there is a need
for the country to continue pursuing monetary policy that ensures a low and
stable infl ation. This is important because low and stable infl ation encourages
stock market activities. In other words, it is important for monetary policy
to remain fi rm and conducive in future for the betterment of sound and
sustainable development of the stock market and general economic activities.
Description
Keywords
Inflation, Stock market development, Namibia, Error correction modelling
Citation
Kaakunga, E.K. & Matongela, A.M. (2013). Infl ation and stock market development in Namibia: Evidence from co-integration and error correction modelling. Journal for Studies in Humanities and Social Sciences, 2(2): 1-14.