FACTORS AFFECTING TRADE BALANCE, THE CASE OF JORDAN

Dr. Mohammad Alawin () and Eman Al-Maghareez ()
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Dr. Mohammad Alawin: Associate Professor, Business Faculty, The University of Jordan, Amman, Jordan
Eman Al-Maghareez: Researcher, Business Faculty, The University of Jordan, Amman, Jordan

Far East Journal of Psychology and Business, 2013, vol. 11 No 2 Paper 3 May, issue 3, 33-49

Abstract: This study attempts to investigate the long-run relationship between Jordanian trade balance and remittances, Real Gross Domestic Production (RGDP), Foreign Direct Investment (FDI), and Real Exchange Rate (RER) for the period (1980-2010). Unit root, Granger causality, and Co-integration tests are used to look into this relationship. The results indicate that all variables have significant impacts on the trade balance except RER. Part of this variable insignificance could be attributed to fixing the nominal exchange rate since 1995. This decision by the Central Bank of Jordan prevents RER, partially, from reflecting changes in the trade balance.

Keywords: Trade Balance; Remittances; RGDP; Foreign Direct Investment; Real Exchange Rate (search for similar items in EconPapers)
JEL-codes: M1 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:fej:articl:v:11b:y:2013:i:3:p:33-49

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