I am interested in understanding when the stock market can influence real growth and the opposite, when real growth can influence the stock market. In other words, in which way causation is more likely to work?
In particular if stock market is growing, will GDP increase or will decrease?
After studying the Blanchard model, I found out that both ways are possible, in fact in its model there are two cases, good news and bad news, but it was never explained in my studies why in one particular market we are in the first case or in the second.
I only know that the answer depends somehow on market efficiency and if the country is still developing or not.