Monetary Policy in Jordan 1967-1997 : Cointegration Analysis

The Monetary Authority in Jordan declares that its policies are geared toward maintaining price and currency stability . To identify the reaction function of the monetary agency in Jordan, Johansen procedure was employed. It appears that all suggested variables are integrated of order one I~(1). Also, it appears that money supply, prices, real income, government expenditures, and international reserves share at least one long run relationship. The short run dynamics suggest that monetary policies are adopted to finance government deficit