Hiroyuki Taguchi and Namjil Enkhbaatar

Correspondence: Hiroyuki Taguchi, tagusaya0710@s3.wh.qit.ne.jp

Graduate School of Humanities and Social Sciences, Saitama University, Japan

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Mongolian stock market is underdeveloped compared with its banking credit market, due to a lot of impediment factors to prevent its development. This means Mongolian economy still has much room where its stock market development promotes the long-term financing and investment into non-mining sectors for sustainable economic growth. This paper aims to provide the evidence on the relationship between stock market and macroeconomic policies in Mongolia under the hypothesis that the recent biases of fiscal and monetary policies would distort her stock-price formation. The empirical analysis in this study found that the cumulative public debt and too high policy rate have stagnated the stock prices, through identifying the negative impulse responses of stock prices to the shocks of policy rate and government securities under a vector-autoregressive model estimation. The strategic policy implication for normalizing the stock prices could be the significance in ensuring budget consolidation and in addressing a fear of floating in monetary policy management in Mongolia.


  Stock Market; Fiscal policy; Government Securities; Monetary Policy; Policy Rate.


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