The Role of Monetary Policy in Shaping Jordan's Economic Growth: A Regression Analysis from 2008 to 2022 (original) (raw)

Does Monetary Policy Affect Economic Growth in Jordan? Evidence from Ordinary Least Square Models

International Business Research

The main objective of this paper is to analyze equilibrium and dynamic causality relationships between monetary policy tools and economic growth in Jordan for the period (1990-2017). For this purpose, it considers the autoregressive distributed lag (ARDL) and vector error correction (VEC) models estimations. The results of ARDL approach show that monetary policy variables (i.e., real interest rate and money supply) have positive impact on economic growth in long-run and short-run except inflation rate. In addition, the results of VECM indicate bidirectional causal relationships between economic growth and monetary policy variables in long-run and short-run.

Effectiveness of Monetary Policy Instruments on Economic Growth in Jordan Using Vector Error Correction Model

International Journal of Economics and Finance, 2017

The global financial crisis emphasized the important role of the prudent monetary policy in supporting economic growth through maintaining price stability. The monetary policy operational framework that was designed in 2008 was updated to include more instruments for managing monetary policy learning from the crisis lessons. Several studies analyzed various dimensions related to economic growth in Jordan such as Abdul-Khaliq, Soufan, and Abu Shihab (2013) and Assaf (2014), there were no studies that investigated the effect of monetary policy on economic growth in Jordan, at least recently, however. The study aims at measuring the effect of monetary policy instruments on the performance of Jordanian economy. Using quarterly data covering the period (2005-2015), an econometric model was examined using Vector Error Correction Model to assess the impact of monetary policy instruments on economic growth. The foremost advantage of VECM is that it has a nice interpretation of long-term and...

Money Supply Role in Economic and Industrial Growth: The Case of Jordan (1990-2010)

Economic theorists from David Hume to Keynes and new Monetarists are all emphasize monetary policy measures to induce economic growth and industrial development. This policy is also used to cure sharp inflation and economic crises. The most two popular monetary measures, used by most countries are money supply and the interest rate. Were these measures used effectively in Jordan? Were they used as inducers or did they just grow parallel and coincided with the achieved economic growth and production in Jordan during the first decade of this century, at a time when the world faces economic and financial crises? The core and the essence of this empirical paper will be to answer these questions with the focus on the money supply role in economic growth. Regression model with lag one year was used in this paper. The purpose of this type of models is to evaluate whether money supply was inducer or grew parallel to economic growth and growth in the industrial sector. For comparisons, two periods were studied. Each period is for a decade. The first period covered the years 1990 to 2000, and the second period covered the years 2001 to 2010. It is concluded that in both periods money supply in Jordan was not used as an inducer to the growth of the economy neither used as an inducer to the growth in the industrial sector.

The Impact of Monetary Policy on Economic Growth in Iran

Evolution of money supply and gross domestic product are in a close relationship. This study examine the relationship between money supply and economic growth in Iran adopting ordinary least squares (OLS) technique and also uses data obtained from the central bank of Iran during 1974 to 2008. To do so, using Levine and Renelt growth model we found that there is a positive and significance relationship between money supply and economic growth in Iran.

The Effect of Macroeconomic Variables on Jordan's Economic Growth

European Journal of Social Sciences

This study investigates the relationship between some macroeconomic variables (export, inflation, foreign direct investment) and economic growth of Jordan. The researcher conducts this study by using multiple linear regression method. In general, the results revealed that exports and inflation has a positive impact on growth. While there is no statistically significant impact of foreign direct investment in economic growth represented by (GDP). The results also shows that increasing the value of exports by one million dollars will lead to an increase in gross domestic product by (0.898) million dollars, and a decrease of inflation rate by (1%) will lead to an increase in gross domestic product by (0.215) million dollars. The results also indicate that the independent economic indicators included in the model explain a rate (97%) of the changes in the economic growth of gross domestic product. The remaining amount (3%), is attributable to other economic indicators were not included in multiple linear regression model.

The Impact of Monetary Veriables on Economic Growth in Selected Islamic Countries *

2015

Achieving a high level of development and economic growth (GDP) has been one of the main objectives of economic planners and policymakers for every country; and tools, variables and policies that can help to achieve this important issue attract a special attention. In this situation, a policy that can be effective in creating GDP growth is to apply appropriate monetary policy for the country. It will be more effective when the effectiveness of each monetary policy tools and variables on the rate of GDP growth is clear and specific. Current study aims to determine the effectiveness of monetary policy variables on the growth of GDP in selected countries (Iran, Turkey and Malaysia) and it examined the influence of the exchange rate, inflation rate, liquidity variables and credit facilities as independent variables on the GDP growth as the dependent variable. The results of the study indicate that each change in selective variables can effect the GDP growth in Iran, Malaysia and Turkey ...

IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH: EVIDENCE FROM PAKISTAN

The objective of this research paper is to investigate the impact of monetary policy on Pakistan's economic growth. We used time series data for the period 1972-2015. The variable of the study were: real gross domestic product, employed labour force, gross capital formation, foreign direct investment, broad money, GDP deflator and exports. The author applied multiple regression method to analyze the data and draw the results. We also used correlation technique to study nature of relationship among variables. We examine long run relationship between monetary policy and the selected variables. We found that monetary policy has significant effect on inflation rate, money supply, employment, gross capital formation, foreign direct investment, saving and other macroeconomic variables. We recommend that central banks should be given free hand to formulate and execute monetary policy but it must have coordination with fiscal policy. In this way, the economy can be managed effectively by economic managers.

Monetary policy and economic growth: A global and sector perspective in Tunisia

2020

In this paper, we empirically examine the impact of key interest rate on national and sector economic growth. Using Tunisian quarterly data in the period 2000-2018, we estimate, in the first step, the long term relationships through VECM analysis and, in the second we enrich our study by introducing variables of interaction. We find that key interest rate significantly and positively influences national and sector economic growth and negatively affects the inflation. In specific, our results show that the economic crisis and the approved credits respectively influence negatively and positively the link between key interest rate and Tunisian economic growth. Finally, we show that the impact of changes in monetary policy is weaker in crisis period and improved by the bank credit rises.

The Effect of Monetary Policy on Economic Growth of selected SAARC countries

2022

The study intended to examine the effect of monetary policy on economic growth of selected SAARC countries. Inorder to fulfill these objectives analysis is based on panel data over 25 years of period from 1996 to 2020 of selected five SAARC nations. Economic growth is measured by GDP per capita growth where exchange rate, inflation, broad money to GDP, external reserve are used as monetary policy variables. The Descriptive and casual relationship research design has been used using secondary data. Hausman test is run to select between the fixed and random effect model and correlation matrix is used in this study to summarize the relationship between variables. Among the variables, external reserve, broad money was found to have positive significant effect on GDP while exchange rate has negative significant effect. Also, inflation was found to have negative insignificant effect on economic growth at 5% level of significance. This study concludes that the inability of monetary policies to effectively maximize their policy objectives most of the time is due to flaws in the policy instruments used, which limits their contribution to growth even though monetary policies have made impressive contributions over the years.

Does Inflation Harm Economic Growth in Jordan?. An Econometric Analysis for the Period 1970-2000

It is expected that inflation we will be an important issue in Jordan because the central bank of Jordan is adopting an easy monetary policy to help promoting the financial market.Therefore, this paper explores the relation between inflation and economic growth to check whether if this relation has a structural breakpoint effect or not.This paper shows that the structural breakpoint effect occurs at inflation rate equal to 2% and after this level the effect turns to be negative. This result says that the maneuver of the monetary policy will be very limited. And, the central bank of Jordan should pay attention to the inflation phenomenon while conducting the new monetary policy.