The Dynamic Iinterrelationships Between Fiscal and Monetary Policies in Jordan
Journal Title: Journal of Economics, Finance and Management Studies - Year 2021, Vol 4, Issue 12
Abstract
This study aims to answer the question: What is the nature of the relationship between fiscal and monetary policy in Jordan? Are the two policies complementary to each other, alternatives, or go in opposite directions?. This study applies the vector autoregression VAR, the Impulse Response Function test, the Granger Causality test, and the. Variance Decomposition Analysis. The results showed that there is a bidirectional causal relationship between government expenditures and money supply, as well as a bidirectional causal relationship between tax revenues and money supply, the main conclusion that the fiscal policy through the use of government expenditures and tax revenues and the monetary policy through the money supply go in the same direction, and complement each other, this is supported by the fact that the expansionary fiscal policy in Jordan during the study period was also accompanied by an expansionary monetary policy. The monetary authority sets interest rates on loans and there is no significant role for fiscal policy instruments in influencing the interest rate in Jordan. The study recommends harmonization between the declared and implemented policy. Each authority should serve its goals with independence and complementarity between the two policies. In this case, coordination means preventing extremism in pursuing an expansionary or contractionary policy from this or that authority, what is required is that the Central Bank and the Ministry of Finance agree on coordination, integration and balance between objectives.
Authors and Affiliations
Jumah Ahmad. Alzyadat
Keywords
Related Articles
- EP ID EP706557
- DOI 10.47191/jefms/v4-i12-20
- Views 91
- Downloads 0
The Level of Sustainability to Operate a Franchised Food Outlet in South Africa: A Fast Food Industry Case
This study aimed to determine the sustainability of operate a franchise in the fast-food industry and operating an outlet of a particular brand. It will also close the literature gap by empirically investigating the infl...
The Influence of Rice Field Area, Agricultural Labor, and Government Expenditure in the Agricultural Sector on Economic Growth in East Java Province
A significant portion of East Java Province's economic growth is attributed to the agricultural sector. The area of rice fields and the number of agricultural workers in East Java Province are the highest in Indonesia, b...
Sosro Bottled Tea Product Marketing Strategy with SWOT Analysis in Penetrating the Global Market
Indonesia has various local products that can compete in the global market, one of which is Teh Botol Sosro, which is the first beverage brand in Indonesia that has been widely recognized in the global market. As an icon...
Examining the Interplay of Consumer Behavior and Local Community Engagement in the Success of OCOP Initiatives: A Case Study of Nghe an Province, Vietnam
This study explores the influence of consumer behavior and community engagement on the success of One Commune One Product (OCOP) initiatives in Nghe An Province, Vietnam, while also investigating the moderating effect of...
Cashless Practice and Corporate Efficiency of Selected Deposit Money Banks in Nigeria: A Review
This study, investigated the effect of the cashless practise on the corporate sustainability of deposit money banks in Nigeria. The extent to which the agenda of cashless practices by the Central Bank of Nigeria on corpo...