EconPapers    
Economics at your fingertips  
 

Oil Prices, External Income, and Growth: Lessons from Jordan

Kamiar Mohaddes () and Mehdi Raissi

Review of Middle East Economics and Finance, 2013, vol. 9, issue 2, 99-131

Abstract: This article extends the long-run growth model of Esfahani, Mohaddes, and Pesaran (Journal of Applied Econometrics, 2012a, forthcoming) to a labor-exporting country that receives large inflows of external income – the sum of remittances, foreign direct investment, and general government transfers – from major oil-exporting economies. The theoretical model predicts real oil prices to be one of the main long-run drivers of real output. Using quarterly data between 1979 and 2009 on core macroeconomic variables for Jordan and a number of key foreign variables, we identify two long-run relationships: an output equation as predicted by theory and an equation linking foreign and domestic inflation rates. It is shown that real output in the long run is shaped by (i) oil prices through their impact on external income and in turn on capital accumulation and (ii) technological transfers through foreign output. The empirical analysis of the article confirms the hypothesis that a large share of Jordan’s output volatility can be associated with fluctuations in net income received from abroad (arising from oil price shocks). External factors, however, cannot be relied upon to provide similar growth stimuli in the future, and, therefore, it will be important to diversify the sources of growth in order to achieve a high and sustained level of income.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1515/rmeef-2012-0011 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Oil Prices, External Income, and Growth: Lessons from Jordan (2012) Downloads
Working Paper: Oil Prices, External Income, and Growth: Lessons from Jordan (2011) Downloads
Working Paper: Oil Prices, External Income, and Growth: Lessons From Jordan (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:99-131:n:2

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/rmeef

DOI: 10.1515/rmeef-2012-0011

Access Statistics for this article

Review of Middle East Economics and Finance is currently edited by Ghassan Dibeh

More articles in Review of Middle East Economics and Finance from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2021-11-22
Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:99-131:n:2