Introduction
    The relationship between the financial sector and the real 
     sector has been the subject of great discussion in economics
    While the literature has largely agreed that the financial 
     sector does impact on the real sector; there is less 
     agreement on the direction of causality
    Moreover, the literature has concluded that not all financial 
     services are created equal; and therefore all sub sectors 
     within the financial sector do not interact with the real 
     sector in the same manner.
    The most recent global financial crisis has prompted some 
     analysts to conclude that some financial innovations may be 
     too risky and there may be a need to revert to simpler bank 
     centric models.
   Objectives of Paper
    The paper investigates the relationship between 
     real private consumption and the return/value of 
     the Jamaica Securities Exchange
    The paper also seeks to determine whether the 
     “wealth effect” is validated in the context of 
     Jamaica
   Literature Review
    Some aspects of the literature focus on the 
     channels of linkage between equity markets 
     and economic growth. 
    Other aspects of the literature deal with the 
     wealth effect associated with price 
     developments on equity markets
    The literature also covers what is termed 
     “uncertainty hypothesis” – associated with 
     the impact of high volatility of private 
     consumption
   Literature Review:
   Stock Markets and Economic 
   Growth
    Levine (1991) derived an endogenous growth 
    model which demonstrates that stock markets 
    can  promote  economic  growth  through  a 
    process  where  they  facilitate  trading  of 
    “ownership”  of  firms  without  allowing  for 
    disruptions in the productive process.
    Bencivenga, Smith, and Starr (1996) develop 
    a model which predicts that as capital 
    markets become more efficient, transaction 
    costs fall leading to a higher rate of return on 
    investments in equity.
   Literature Review:
   Stock Markets and Economic Growth
   Developing country studies
    Osinubi (2004) utilized data for the period 
     1980 to 2000 for Nigeria. His results 
     suggested a positive relationship between 
     stock market size, stock market liquidity 
     and economic growth
    In a similar study, Nowbutsing and Odit 
     (2009) using data for Mauritius for the 
     period 1989 to 2007, found stock market 
     size and liquidity to be both positively 
     related to economic growth.