Dynamics of Industrial Production Index and Inflation on Financial Market (Focusing on Industry Index and Total Index of Iranian Stock Market)

Articles in Press

Document Type : پژوهشی

Authors

Abdonaser Derakhsan ¹

Alireza َAbroud ²

Farshid Ahmadi Farsani ²

¹ Assistant Professor, Department of Management, Iranshahr Province University, Sistan and Baluchistan, Iran.

² Assistant Professor

https://doi.org/10.22067/mfe.2025.91158.1483

Abstract

The link between stock returns and macroeconomic indicators has been a debatable phenomenon at all times. industry index reflects performance of stock market and state of industry and production of each country. Potential macroeconomic factors may have significant long-term effects on industry index. Therefore, this paper empirically examines dynamics of industrial production and inflation on industry index and total index of Iranian stock market using ARDL model with monthly data during period from 2015 to 2023. empirical results showed that logarithm of consumer price index has a positive and significant long-term effect on industry index and total index. In addition, results indicate a positive and significant long-term relationship between industrial production and industry index. In addition, there is a positive and significant relationship between industrial production and total market index. The results of this study highlight complexity of stock market dynamics influenced by inflation and industrial production. findings of this study can be valuable for investors and policymakers in identifying the response of Iranian stock market to production and inflation.

Keywords

inflation

industrial production

industry index

financial market

Subjects

• financial markets

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