Do Remittances Transmit the Effect of US Monetary Policy to the Jordanian Economy?
The purpose of this paper is to examine the international transmission of US monetary policy to real variables (inflation and GDP) in the Jordanian economy through the channel of remittances using yearly data from 1980 to 2013. The VEC model is used to estimate the transmission of US monetary policy shocks to Jordan’s real GDP while the VAR model is used to estimate the transmission to the inflation rate. US monetary policy shocks are found to transmit to real GDP but not to inflation. The results of this study suggest that the monetary policy of the Central Bank of Jordan is successful in containing inflationary pressures and keeping inflation rates at acceptable levels, which is the bank’s main monetary policy goal.
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