Empirical investigation of economic reform program in Jordan

Abstract EN

During the eighties, Jordan witnessed a severe economic condition, a low rate of economic growth, a high rate of inflation, and balance of payments problem.

Consequently, the real per capita income was falling by more than 1.5 % annually during the 1983-1988.

In the light of these dramatic changes, the government was unable to fulfill its financial obligations concerning foreign debt as it ran out of foreign exchange deposits.

In 1989, Jordan adopted an economic reform program by the blessing of the International Monetary Fund (IMF).

The main objective of this study is to evaluate the economic reform program by examining" the performance of the Jordanian economy during the period between 1979 and 1999 with special emphasis on fiscal and monetary policies.

The researchers conducted an empirical analysis of the IMF policy model to determine the potential effectiveness of reform program in stabilizing the economy.

For the years examined, we have found that the monetary policy has the potential to be effective in stabilizing the aggregate demand, while fiscal policy was ineffective in controlling the foreign reserves, or had an influence in lowering the inflation rate.