Interaction between Fiscal and Monetary Policies: Directions of Causality in Case of Jordan 1990-2011
Keywords:
fiscal policy, monetary policy, government expenditure, money supply, inflation, granger-causality, co-integration, jordan
Abstract
This paper is an effort to explore the interaction between fiscal and monetary policies in Jordan through investigating the short-term and long-term relationship between government expenditure as a fiscal policy, money supply as a monetary policy, and inflation as a result and cause of these policies. Using annual data for the period 1990-2011, the study applies cointegration test, Granger-causality, and VECM techniques to inspect the long-term and shortterm relationship and the directions of causality, also the speed of adjustment toward long-term equilibrium between the variables.
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2015-04-22
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