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GDP and Inflation: New Story from a Developing World: Case of Jordan

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  • Rasha Istaiteyeh
  • Farah Najem

Abstract

This research examines the short-run and long-run relationships between inflation and economic growth in Jordan during 1977-2021. A two-variable VAR model with three lags was conducted to systematically capture the dynamics in the two-time series, inflation, and economic growth. The dynamic properties of the VAR (3) were summarized using impulse response functions and variance decompositions. There was no long-run relationship between inflation and economic growth, instead, a potential positive short-run relationship exists. Our findings are aligned with the existing body of literature on the nexus between inflation and economic growth; the results of our study can be utilized formulate macroeconomic policies by promoting economic growth which in return provides a stable economic environment without causing inflationary pressures. It could also be utilized by other countries with similar economic structures. Therefore, it is suggested that the country should maintain a moderate inflation rate for short-run growth. Â JEL classification numbers: E6, E31, O11.

Suggested Citation

  • Rasha Istaiteyeh & Farah Najem, 2023. "GDP and Inflation: New Story from a Developing World: Case of Jordan," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(6), pages 1-2.
    • Handle: RePEc:spt:admaec:v:13:y:2023:i:6:f:13_6_2
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    References listed on IDEAS

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    More about this item

    Keywords

    Inflation; Economic growth; Jordan; SDGs; Vector Autoregressive Model.;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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