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Arab Journal of Administration المجلة العربية للإدارة

Abstract

This study aims mainly to study the most important internal and external factors affecting the inflation dynamics in Jordan, and measuring the impact of these factors on the inflation dynamics, has been the introduction of several variables in the estimated model is imported inflation, the national exports, GDP, money supply in its broad sense, credit facilities, workers’ remittances and external shocks, has been the use of quarterly data during the period from 2000 until the third quarter of 2010.This study used the applied methods of measuring the economic relations of long-and short-term, using the concept of Co-integration and Error Correction Model and analysis of Variance Decomposition and Impulse Response Function, and after the application of these statistical tests on all variables of the study using statistical analysis (E-Views) show that all variables are stationary at the first deference, including four long-term relationships.The results of the regression error correction has shown that the dynamics inflation in the short term are affected by a significant positive increase imported inflation and the national exports, and affected by increased credit facilities and transfers of staff and external shocks, compared to the opposite effect of GDP growth on the inflation dynamics and there is insignificant of the money supply in its broadest sense to inflation dynamics. The extent ECTdi error correction signal is negative as expected, it has an impact on the balance in the long term, and the speed of adaptation in the access to long-term is 0.064030 that is approximately 6%. The test results of Variance Decomposition and test Impulse Response Function showed a consensus with the previous tests.And the study's recommendations can be summarized as the need for effective policies to reduce imports and increase GDP and internal balance, increase foreign investment in local productive sectors.

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