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

Kamiar Mohaddes and Mehdi Raissi

No 688, Working Papers from Economic Research Forum

Abstract: This paper extends the long-run growth model of Esfahani et al. (2009) to a labor exporting country that receives large inflows of external income — the sum of remittances, FDI 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 paper confirms the hypothesis that a large share of Jordan’s output volatility can be associated with fluctuations in net income received from abroad. 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.

Pages: 31
Date: 2012, Revised 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published by The Economic Research Forum (ERF)

Downloads: (external link)
http://erf.org.eg/wp-content/uploads/2014/08/688.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://erf.org.eg/wp-content/uploads/2014/08/688.pdf [301 Moved Permanently]--> https://erf.org.eg/wp-content/uploads/2014/08/688.pdf)
http://bit.ly/2meNvmq (text/html)

Related works:
Journal Article: Oil Prices, External Income, and Growth: Lessons from Jordan (2013)
Working Paper: Oil Prices, External Income, and Growth: Lessons from Jordan (2011)
Working Paper: Oil Prices, External Income, and Growth: Lessons From Jordan (2011)
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:erg:wpaper:688

Access Statistics for this paper

More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Namees Nabeel ().