I believe answering such questions needs empirical tools not speculations, unless one is an armchair economist. At the starting point must be reality, then we can sit and theorise that reality
Do financial markets drive real economy? We can approach it with causal discovery tools over two time-series. We almost surely know that there is no connection between these two, for instance from papers such as IMF paper of Igan et al. 2020. Also there is a body of evidence that gdp drives financial markets, not vice versa
However, I believed that to address this specific question we have to casually study the relation between fixed capital formation or real investment and financial market growth. The literature here is inconclusive, e.g. Muyambiri2018, to the best of my knowledge.
Overall, It seems that financial markets do not have any significant effect on the real economy (e.g. look at the booming market of Caracas, Venezuela) moreover, , if we think about the human resources engaged with the financial market instead if doing something real, we can conclude that the effect is adverse.
I believe answering such questions needs empirical tools not speculations, unless one is an armchair economist. At the starting point must be reality, then we can sit and theorise that reality
Do financial markets drive real economy? We can approach it with causal discovery tools over two time-series. We almost surely know that there is no connection between these two, for instance from papers such as IMF paper of Igan et al. 2020. Also there is a body of evidence that gdp drives financial markets, not vice versa
However, I believed that to address this specific question we have to casually study the relation between fixed capital formation or real investment and financial market growth. The literature here is inconclusive, e.g. Muyambiri2018, to the best of my knowledge.
Overall, It seems that financial markets do not have any significant effect on the real economy (e.g. look at the booming market of Caracas, Venezuela) moreover, , if we think about the human resources engaged with the financial market instead if doing something real, we can conclude that the effect is adverse.