Monetary Policy and the Central Bank in Jordan
AbstractThe Central Bank of Jordan (CBJ) and its operational independence changed over time in line with the evolution of the monetary policy framework and as a result of the currency crisis in the late 1980s. The paper examines the developments of the CBJ, its independence in conducting monetary policy and the various instruments at its disposal, with special focus on the certificates of deposit (CDs) market, the main monetary policy instrument, and the treasury bill market. The paper also examines the issue of the autonomy of monetary policy in Jordan given the influence of world interest rates. Although, Jordan operates an exchange rate peg, which has been fixed to the USD since 1995, there is some room for flexibility in operating monetary policy in the short-run, where the CBJ has some autonomy in determining the spread between domestic and US interest rates. VAR and VECM results suggest that the response of the policy rate in Jordan to innovations in the US Federal Fund's rate is less than one-for-one. In the short-run, the CBJ appears to conduct monetary policy in response to domestic inflation and a measure of the domestic output gap.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 09/191.
Date of creation: 01 Sep 2009
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-10 (All new papers)
- NEP-CBA-2009-10-10 (Central Banking)
- NEP-CWA-2009-10-10 (Central & Western Asia)
- NEP-MAC-2009-10-10 (Macroeconomics)
- NEP-MON-2009-10-10 (Monetary Economics)
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- Mohaddes, K. & Raissi, M., 2011.
"Oil Prices, External Income, and Growth: Lessons from Jordan,"
Cambridge Working Papers in Economics
1164, Faculty of Economics, University of Cambridge.
- Mohaddes Kamiar & Raissi Mehdi, 2013. "Oil Prices, External Income, and Growth: Lessons from Jordan," Review of Middle East Economics and Finance, De Gruyter, vol. 9(2), pages 99-131, August.
- Mehdi Raissi & Kamiar Mohaddes, 2011. "Oil Prices, External Income, and Growth: Lessons from Jordan," IMF Working Papers 11/291, International Monetary Fund.
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