Do Macroeconomic Variables Play Any Role In The Stock Market Movement In Ghana?

This paper examines the impact of macroeconomic variables on stock prices. The authors use the Databank stock index to represent the stock market and inward foreign direct investments, the treasury bill rate (as a measure of interest rates), the consumer price index (as a measure of inflation), Average crude oil prices, and the exchange rate as macroeconomic variables. They analyse quarterly data for the above variables from 1991.1 to 2007.4. employing cointegration test, Vector Error Correction Models (VECM). These tests examine both long-run and short-run dynamic relationships between the stock market index and the economic variables. The paper established that there is cointegration between macroeconomic variable and Stock prices in Ghana indicating long run relationship.