Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

The Impact of Monetary and Fiscal Policy on Stock Market Performance: Evidence from Multiple Countries

Authors
Xiqing Chen
Sydney Girls High School, Sydney, New South Wales, 2010, Australia
Corresponding author. Email: gaoming@cas-harbour.org
Corresponding Author
Xiqing Chen
Available Online 15 December 2021.
DOI
10.2991/assehr.k.211209.128How to use a DOI?
Keywords
Monetary policy; Interest rates; stock market; fiscal policy
Abstract

Through the comprehension of secondary data and analysis from different sources, this paper explores the impacts of monetary and fiscal policy on the stock market with evidence from Australia, China, 11 member countries of the Eurozone (combined) and the United States. In the theoretical aspect, monetary policy can impact stock market performance through the interest rate channel, credit channel and investors’ expectations. However, results indicate that the effect of monetary policy on stock market performance varies between countries due to different market expectations. It can be concluded that the anticipation of regular announcement periods often corresponds to a less volatile stock market index than surprise announcements. On the fiscal side, its relationship with stock market performance can be explained through either the Keynesian, Ricardian or classical economic theory. The conclusions drawn reflect the stock market responding in a negative manner following an expansionary stance under normal macroeconomic conditions, whilst a positive correlation is seen during periods of economic downturn. Furthermore, an indirect relationship between fiscal policy and stock market performance is interpreted through the channel of money supply. Thus, the effects of macroeconomic policies on stock market performance shown in this paper could help investors and governments in their decision making, leading to more effective allocation of resources.

Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
10.2991/assehr.k.211209.128
ISSN
2352-5428
DOI
10.2991/assehr.k.211209.128How to use a DOI?
Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Xiqing Chen
PY  - 2021
DA  - 2021/12/15
TI  - The Impact of Monetary and Fiscal Policy on Stock Market Performance: Evidence from Multiple Countries
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 779
EP  - 783
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.128
DO  - 10.2991/assehr.k.211209.128
ID  - Chen2021
ER  -