vol 17 no 1,2017

Determinants of Jordanian Trade Balance: An ARDL Approach

Dr. Khaled Mohammed Al-Sawaie
Assistant Professor of Economics
Faculty of Economics and Administrative Sciences -Zarqa University 
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Abstract:

This study examines the short-term and long-term relation between trade balance, the income, the money supply and the real effective exchange rate of the Jordanian economy by using the Bounds Testing Approach (BTA) and Error Correction Model (ECM) in the framework of ARDL to verify the existence of a stable relationship in the long – run between the trade balance and its determinants in the period 1976- 2013. The results of the (BTA) show that the money supply and the income play a strong role in determining the behavior of the trade balance, and the exchange rate improves the trade balance.

Key words: determinants of the trade balance, the current account, real effective exchange rate, money supply, ARDL, bound test approach (BTA) .

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