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... (read more)
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... (read more)