The Impact of Monetary and Fiscal Policy on Stock Market Performance: Evidence from Multiple Countries
- 10.2991/assehr.k.211209.128How to use a DOI?
- Monetary policy; Interest rates; stock market; fiscal policy
Through the comprehension of secondary data and analysis from different sources, this paper explores the impacts of monetary and fiscal policy on the stock market with evidence from Australia, China, 11 member countries of the Eurozone (combined) and the United States. In the theoretical aspect, monetary policy can impact stock market performance through the interest rate channel, credit channel and investors’ expectations. However, results indicate that the effect of monetary policy on stock market performance varies between countries due to different market expectations. It can be concluded that the anticipation of regular announcement periods often corresponds to a less volatile stock market index than surprise announcements. On the fiscal side, its relationship with stock market performance can be explained through either the Keynesian, Ricardian or classical economic theory. The conclusions drawn reflect the stock market responding in a negative manner following an expansionary stance under normal macroeconomic conditions, whilst a positive correlation is seen during periods of economic downturn. Furthermore, an indirect relationship between fiscal policy and stock market performance is interpreted through the channel of money supply. Thus, the effects of macroeconomic policies on stock market performance shown in this paper could help investors and governments in their decision making, leading to more effective allocation of resources.
- © 2021 The Authors. Published by Atlantis Press International B.V.
- Open Access
- This is an open access article under the CC BY-NC license.
Cite this article
TY - CONF AU - Xiqing Chen PY - 2021 DA - 2021/12/15 TI - The Impact of Monetary and Fiscal Policy on Stock Market Performance: Evidence from Multiple Countries BT - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) PB - Atlantis Press SP - 779 EP - 783 SN - 2352-5428 UR - https://doi.org/10.2991/assehr.k.211209.128 DO - 10.2991/assehr.k.211209.128 ID - Chen2021 ER -