Conventional Nonlinear Relationships between GDP , Inflation and Stock Market Returns. An investigation for the Greek Economy

One of the most enduring debates in economics is whether financial development causes in a linear or nonlinear manner, economic growth or whether it is a consequence of increased economic activity. Little research into this question has been done for the case of Greece especially in a nonlinear framework. This paper fills this gap by using simple nonlinearity tests to provide evidence of a positive and significant causal relationship going from stock market development to economic growth in Greece during the last 10 years.