The Impact of Macroeconomic Variables on Stock Prices in Pakistan

International Journal of Economics and Empirical Research. 2014, 2(1), 13-21

9 Pages Posted: 23 Aug 2018

See all articles by Ahmed Imran Hunjra

Ahmed Imran Hunjra

University of Waikato; Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Dr. Muhammad Irfan Chani

COMSATS University Islamabad

Muhammad Shahzad Ijaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Muhammad Farooq

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Date Written: 2014

Abstract

Purpose: The macroeconomic variables are crucial for any change in economy for a country. Any abrupt change among these variables has impact on the economy in various ways. In case of any change the regulatory authority take steps and make amendment in their policies that would put the economy on development track. The aim of the study is to determine the impact of interest rate, exchange rate, and GDP and inflation rate on stock prices in Pakistan. The monthly data of eleven years’ ranges from 1st January, 2001 to December 31th 2011 was used for this research study.

Methodology: Granger causality and cointegration tests are applied on the data to estimate the possible impact of macroeconomic variables on stock prices.

Findings: The findings of the study revealed that there is no relationship between dependent variable and explanatory variables in short run. On the other hand, results show that there is strong relationship in long run.

Recommendations: It is concluded that in long run there is significant relationship between macroeconomic variables on stock prices.

Keywords: Interest Rate, Exchange Rate, Inflation Rate, GDP, Stock Prices

Suggested Citation

Hunjra, Ahmed Imran and Chani, Muhammad Irfan and Ijaz, Muhammad Shahzad and Farooq, Muhammad, The Impact of Macroeconomic Variables on Stock Prices in Pakistan (2014). International Journal of Economics and Empirical Research. 2014, 2(1), 13-21. Available at SSRN: https://ssrn.com/abstract=3229710

Ahmed Imran Hunjra (Contact Author)

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Shamsabad, Punjab 44000
Pakistan
00923457162527 (Phone)

Muhammad Irfan Chani

COMSATS University Islamabad ( email )

Mailsi Road
Off Multan Road
Vehari, Punjab
Pakistan

HOME PAGE: http://ww3.comsats.edu.pk/faculty/FacultyDetails.aspx?Uid=19095

Muhammad Shahzad Ijaz

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Rawalpindi, 44000
Pakistan

Muhammad Farooq

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Muree Road Rawalpindi
Rawalpindi, Punjab 44000
Pakistan

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