Money, output and stock prices in the UK: evidence on some (non)relationships

The methodology of Granger's causality is used to investigate lead-lag relationships among the money supply, real output and stock prices in the UK. The results suggest that (i) stock prices tend to lead the MS money supply, (ii) the monetary base tends to lead real GDP, (iii) stock prices tend to lead real GDP, (iv) there are feedback effects between money supply volatility and stock price volatility, (v) real GDP volatility tends to lead stock price volatility and (vi) that real GDP volatility leads the money supply.