The research aims at analyzing the causal relationship among Foreign Direct Investment, Domestic saving and Economic Growth in Jordan during the period .The Co-integration Test of Johansen shows that foreign direct investment and domestic saving are in the long run relationship with real income growth in Jordan. Whereas, the impact of foreign direct investment on economic growth is statically significant while the impact of domestic saving is not statistically significant on economic growth in the long run in Jordan.The results of error correction model show that: ECT (Error Correction Term) is 5.5619%, negative and statistically significant at α= 1% which means that the short run values of GDP converge it's long run equilibrium level by 5.5619% speed of adjustment every year by contribution of Foreign Direct Investment (FDI) and Domestic saving (DS) in Jordan.Granger Causality Test show that foreign direct investment in Jordan is output and saving driven which means that if income and saving increases, Jordan will attract more foreign direct investment.
This study aims to investigate the relationship between the money supply (M1) and inflation in the Jordanian economy during the period of 1980–2019.To achieve the goal of the study, the methodology of econometric analysis of time series was used through the following tests: Augmented Dickey-Fuller (ADF) test – to test the stability of the study variables, Johansen’s Cointegration Approach – to determine the long-term equilibrium relationship between the study variables, and the Granger Causality Test – to determine the direction of the causal relationship if it exists in the short term.The study results demonstrate that inflation has stabilized at the level, while the money supply M1 was unstable at the level and stabilized after taking the first difference. The Cointegration test results indicated that there was no causal link between the money supply M1 and inflation in the long term. Finally, the results of Granger Causality presented a unidirectional causality running from the money supply M1 to inflation in the short term, meaning that money supply causes inflation, not vice versa; this means that the money supply M1 can explain the changes that occur in the consumer price index (CPI) in the Jordanian economy.The study recommends that the monetary authority in Jordan should have greater control over the money supply due to its impact on the stability of the general level of prices, in order to avoid a repeat of the 1989 crisis represented by the sharp decline of the dinar exchange rate against other currencies and an increase in inflation that year to 25.6%.
This study aimed to examine the impact of external factors (external grants and aid, external public debt, remittances of Jordanians labor abroad and external shocks) on the efficiency of the monetary policy, which aims at achieving monetary stability through influencing inflation rates in Jordan during the period 1990–2015, by using standard regression equation estimated by the ordinary least squares (OLS). The findings of the study showed a statistically significant impact at 1% of each of the external grants and aid, and remittances of Jordanians labor abroad on the efficiency of monetary policy through targeting inflation rates in Jordan. As to the variables of external public debt and external shocks, the findings showed a weak impact, which was not statistically significant at a reasonable level, on the efficiency of monetary policy. The researchers recommended that decision-makers pay further attention to the vital role of the remittances of the Jordanians labor abroad, which is one of the main bases of the Jordanian economy. This is due to its crucial impact on the Jordanian economy.
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