Analysis of the impact of macroeconomic indicators on the volatility of financial markets in the context of global economic instability

Abstract

This article examines the impact of macroeconomic indicators on the volatility of financial markets in the context of global economic instability using the IMRAD framework (introduction, methods, results and discussion). Financial markets are an important indicator of economic stability and are negatively affected by fluctuations in key macroeconomic indicators such as inflation, interest rates, gross domestic product growth, and unemployment. In the context of global economic instability, the role of these indicators is of particular importance. The article aims to study how these macroeconomic indicators affect market volatility and what conclusions can be drawn for economic policy. The analysis is based on econometric modeling methodology using time series. The study applies GARCH (Generalized Autoregressive Conditional Heteroskedasticity) models, which allow taking into account time dependencies of volatility. The data are collected from public sources such as the IMF, the World Bank, and the Federal Reserve System on four key macroeconomic indicators over the past 20 years. The analysis shows that there is a significant relationship between increasing macroeconomic instability and increasing volatility in financial markets. In particular, high inflation and interest rate fluctuations lead to increased instability in the stock and currency markets. In regions with high levels of external debt, volatility increases more sharply. The results of the study highlight the need for central banks and government agencies to take measures to smooth out macroeconomic shocks. In addition, accelerating globalization increases the interdependence of markets, making national economies more vulnerable to external factors. Finally, regulatory approaches that can help reduce volatility in uncertain times are discussed.