Empirical investigation of the impact of import prices on domestic prices : the case of Jordan 1970-1996

Abstract EN

This paper examines the impact of import prices on Jordan's domestic prices, using a long-linear model.

It has utilized annual data for the period 1970-1996, applying Ordinary Least Square Technique (OLS).

The empirical results of the paper show that the Jordanian economy is highly sensitive to inflationary impulses from the outside world.

Yet, this is not the only explanatory factor of the inflationary phenomenon.

They also indicate that the price of the Unit Value of Imports and Real Gross National product growth rate are major contributors to inflation in Jordan.

The role of expected inflation was not significant, while the exchange rate ($/JD) factor reduces the domestic price level.

However, the results in general are consistent with the hypothesis and with those of most previous empirical studies.