Author(s): Toan Ngoc Bui
The paper investigates the nexus between inflation and stock index in Vietnam, a developing country with an emerging stock market. Data are collected quarterly in the period of fourteen years. The author employs the Autoregressive Distributed Lag (ARDL) approach which is appropriate for empirical research with short data series to analyse the correlation between inflation and stock index in the short run and long run. The results reveal the unidirectional impact of inflation on stock index in the short run and long run, which is significantly negative. These findings are meaningful to economies around the world, especially developing countries like Vietnam. Based on these results, policymakers can develop suitable policies in order to keep inflation under control as well as develop a stable stock market. The valuable findings are also essential for consideration by investors in making wise decision in the short run and long run.