Causal Loop Modeling of Macroeconomic Determinants of Stock Market Volatility

Prof. Sonam Bhadauriya

doi:https://doi.org/10.51976/gla.prastuti.v3i2.321406

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Causal Loop Modeling of Macroeconomic Determinants of Stock Market Volatility

Sonam Bhadauriya

https://doi.org/10.51976/gla.prastuti.v3i2.321406

Published Online: January 20, 2015

Author Details ( * ) denotes Corresponding author

1. * Sonam Bhadauriya, Assistant Professor , Department of Humanities, NIMS University, Jaipur, Rajasthan, India (sbhadauriya@live.in)

Stock market is one of the most important sources for companies to raise money. It allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an upcoming economy.

Stock market dynamics or volatility refers to the variation in the stock price changes during a period of time. The volatility of stock market indicators goes beyond anyone’s reasonable explanations. Generally, variations in stock market are caused by the fluctuations in the performance of the economy or the macroeconomic indicators of an economy. The modeling of stock market volatility is one of the key areas of present financial research as stock market is the main determinant of economic development of a country. The present paper is intended at developing a dynamic model of macroeconomic determinants of stock market volatility via a causal loop diagramming.

Keywords

Stock market volatility, macroeconomic determinants, causal loop diagram

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