The stock market plays a pivotal role in the sustainable development of an economy. Fishers
hypothesis in the stock market specifies that stock returns are directly linked to the rate of inflation.
The objective of this paper is to explore this relationship using panel dataset for 56 countries from 1950-2018 and
applying general to a specific technique for above-average Money Supply/GDP countries and below-average
Money Supply/GDP countries separately and for different income group countries i.e. high-income countries,
upper-middle-income countries, and lower-middle-income countries. Our analysis indicates that the Fisher
hypothesis holds in the world economies except for lower-middle-income countries but it holds in its weak form.
Lecturer Economics, Department of Economics, International Institute of Islamic Economics, International Islamic University, Islamabad, Pakistan.
Associate Professor, Department of Economics, International Institute of Islamic Economics, International Islamic University, Islamabad, Pakistan
Fisher Hypothesis, Stock Market, Inflation, General to Specific Technique.