An Investigation of Granger Causality between Oil-Price, Inflation and Economic Growth in Jordan

Hussein Ali Al-Zeaud

An Investigation of Granger Causality between Oil-Price, Inflation and Economic Growth in Jordan

Hussein Ali Al-Zeaud * §

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§ Al al-Bayt university Mafraq-Jordan

An Investigation of Granger Causality between Oil-Price, Inflation and Economic Growth in Jordan

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Abstract

This paper is an empirical investigation on the directional causality between oil price (oil imports cost), gross domestic product (GDP) and Inflation (consumer price index) for the period 1990-2011 in Jordan. Using Johannes-Juseliusco-integration test, Granger-causality test, and VECM to inspect the long-term relationship, the short-term relationship and the speed of adjustment toward long-term equilibrium between the variables. The tests’ results indicate that there is a long-run equilibrium relationship between gross domestic product these results indicate that there is a long-run equilibrium relationship between gross domestic product (LGDP) and other variables oil cost (LOP) and inflation (LINF). The estimation of the adjustment speed indicates that (58%) of any previous year’s deviation in gross domestic product (GDP) from its long-run equilibrium path will be corrected in the current year. Furthermore, the VECM reveals the existence of a significant, negative and weak (-0.046) causation relationship in the short run between (GDP) and oil cost (OP) running from oil cost to (GDP).

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Hussein Al-Zeaud. 2014. "An Investigation of Granger Causality between Oil-Price, Inflation and Economic Growth in Jordan". Global Journal of Management and Business Research, Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 14 (GJMBR Volume 14 Issue B6).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

and VECM granger causality test gross domestic product inflation Johannes- Juseliusco-integration test oil price (cost)speed of adju

Classification

GJMBR-B Classification JEL Code: O40

Submission ReceivedDecember 16, 2013
Peer Review Double Blind
Handling Editor
Accepted January 1, 2014
Published January 15, 2014

Version of record

v1.2

Issue date

October 6, 2014

Language

English

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Article Matrices

Total Score: 148

Country: Jordan

Subject: Global Journal of Management and Business Research

Authors: Hussein Ali Al-Zeaud (PhD/Dr. count: 0)

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