Determinants of Jordanian Current Account during the Period (1995-2018)

Abstract

Objectives: The study aims to analyze the Jordanian current account determinants during the period of 1995-2018 and demonstrate their importance in affecting the Jordanian current account balance to draw policies and find ways to help reduce the deficit in the current account balance in Jordan.
 Methods: The analytical-qualitative and the econometric methods were adopted in addition to the Autoregressive Distributed Lag (ARDL) approach to examine the relationship between the current account deficit and the economic factors affecting it.
 Results: The study revealed that there are long-term effects between the study variables, mainly general budget deficit, private savings, trade exposure rate, effective real exchange rate, international exchange rate, gross investment, GDP growth rate, and current account balance. The results also indicated a negative impact of the general budget deficit, private savings, and trade exposure rate on the current account balance and a positive impact of the effective real exchange rate, gross investment, and GDP growth rate on the current account balance. The study shows that Jordan has a deficit in the current account balance, and this is mainly due to the impact of the negative budget deficit and the deficit of its trade balance.
 Conclusions: The study recommends implementing some strategies to stabilize the current account deficit, the most important of which are supporting and promoting Jordanian exports, focusing on controlling public expenditure, reducing external debt, and stimulating and diversifying productive sectors.