Macroeconomic Influence on the Stock Market: A Review Influence on the Stock Market: A Review

Abstract

The purpose of this study is to systematically review the finance theories, macroeconomic variables and the econometric methods employed by the past studies to investigate the nexus between the macroeconomic variables and the stock market. The study employs 58 studies, published in journals, which are rated by the Australian Business of Deans Council (ABDC). As per the review, dividend discount model, arbitrage-pricing theory and the efficient market model are the commonly used finance theories by the selected literature. The review results further showed that, selected past research have given more emphasize towards the macroeconomic variables and very poor attention on the international and global macroeconomic variables. Moreover, past studies have employed a very limited range of econometric methods to examine the association between the macroeconomic variables and the stock market.