This study investigates the influence of the stock market on economic growth by extending the
Mankiw–Romer–Weil (1992) model to incorporate the stock market.1 Atje and Javanovic (1993)
augment the Mankiw–Romer–Weil (MRW) model with a variable for the stock market. They
examine the influence of the stock market on the level and growth rate of economic activity, and find
a large effect of the stock market on economic growth. The present study decomposes capital into
two components, non-stock market capital and stock market capital, and treats the stock market as