Economic growth and the stock market: a PVAR approach to the effects of China in Latin America
DOI:
https://doi.org/10.22481/ccsa.v18i31.7885Keywords:
Global financial crisis. Latin America. Stock market. China effects. Economic growth.Abstract
The global financial crisis, triggered by the U.S. high-risk mortgage market, has spread around the world, affecting all classes of financial assets. The crisis has caused negative impacts that still have repercussions on the weakest economies. The relationship between economic growth and the instability caused by the financial crisis is analysed in the leading Latin American stock markets, namely in Argentina, Brazil, Chile, Colombia, Mexico, and Peru. A Pairwise Granger causality also supports the presence of impacts from China to Latin American countries' equity markets and Gross Domestic Product. The estimation of a Panel Vector Autoregressive allowed us to confirm the presence of the called "China Effect" in Latin American countries. Finally, the results confirm a strong relationship between the Gross Domestic Product and stock market of China, and the Gross Domestic Product and stock markets of Latin American countries.
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