Currency substitution hypothesis : the case of Jordan and Israel

الملخص EN

The main purpose of this paper is to measure currency substitution in two countries: Jordan and Israel.

By applying co-integration method, the paper determines wether currency substitution existed in the two countries, and since when.

The results indicated that currency substitution did not exist in Jordan before 1994, while currency substitution in Israel was a significant phenomenon.

The paper comes with some conclusions and recommendations concerning current monetary policy in Jordan.