ISSN: 1998 - 4162

JISR MSSE Journal Contents

Volume 5, Number 2, July 2007

The Relation between Stock Prices and Money Supply in Pakistan: An Investigation
Nawaz Ahmad - SZABIST, Karachi, Pakistan

This paper examines the causal relationship between money supply and stock prices. The analysis indicates a long-run relationship between stock prices and money supply. The analysis further indicates uni-directional causality from Money Supply to KSE 100 Index both in the short run and in the long run. This implies that the stock market is not efficient with respect to M2 and past information regarding monetary assets can be helpful to predict movements in stock prices.


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