ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book focuses on an empirical investigation of the effects of financial volatility on real economic activity. It aims to provide the literature on the causes of stock market volatility by examining the determinants of movements in the volatility of equity returns in a small, internationally integrated stock market. Literature indicates a revival of interest in the relationship between the financial sector and macroeconomic activity. With respect to monetary influences, the book examines how monetary volatility is transmitted to the volatility of financial asset prices, inflation and real output in an open economy. It is concerned with the relationship between the volatility of financial asset prices and macroeconomic activity. The book shows that volatile financial asset prices have been transferred towards increasing volatility of both real and financial activity.
