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DETERMINANTS OF JORDAN-TURKISH BILATERAL TRADE BALANCE

Year 2019, Volume 6, Issue 1, 32 - 40, 30.03.2019
https://doi.org/10.17261/Pressacademia.2019.1026

Abstract

Purpose - This paper explores empirically the determinants of the bilateral trade balance for Jordan-Turkish economy, and the impact of the free trade agreement between Jordan and Turkey on the Jordanian-Turkish trade balance.

Methodology - The study used Autoregressive Distribution Lag (ARDL) model to estimate the long run relationship between Jordanian- Turkish bilateral trade balance and its determinants during the period from 1978 until 2017.

Findings - The result of the analysis found that the real effective exchange rate has a positive effect on the trade balance in the long run, and negative effect on the trade balance in the short run, while the relative money supply and relative GDP have a weak effect on the trade balance in the short and long run. Also, the result points out that the impact of the free trade agreement is insignificant on the trade balance in the long run, which supports the position of the Jordanian government, which has revoked the work in this agreement.

Conclusion - The most important policy implication to be concluded from these empirical findings is that devaluation of Jordan Dinar against Turkish Lira can be used to accomplish an improvement in the trade balance of Jordan against Turkey. However, increasing the relative money supply or relative income will not achieve the desired goal.

References

  • Abu-Lila, Z., Jdaitawi, Q. (2015). Bilateral trade elasticities of Jordan. Dirasat Journal: Administrative Science, 42 (2), 611-622.
  • Alhanom, I. (2016). Determinants of trade balance in Jordan. NG- Journal of social Development. 5 (2), 24-34.
  • Al-Sawaie, K. (2017). Determinants of Jordanian trade balance: An ARDL approach. Zarqa Journal for Research and Studies in Humanities.17 (1),138- 149.
  • Bahmani-Oskooee, M., Ratha, A. (2004). The J-Curve: A literature review. Applied Economics, 36 (13), 1377-1398.
  • Celik, S., Kaya, H. (2010). Real exchange rates and bilateral trade dynamics of Turkey: Panel co integration approach. Applied Economics Letters, 17 (8), 791-795.
  • Cergibozan, R., Ari, A. (2017). The exchange regime and trade balance in Turkey. The International Trade Journal
  • Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36 (1), 89-102.
  • Kyereme, S. (2002). Determinants of United States' trade balance with Australia. Applied Economics, 34 (10), 1241-1250.
  • Mundell, R. A. (1971). Monetary theory. Goodyear, Pacific Palisades, Calif., 1971.
  • Ogbonna, B. (2011). The impact of exchange rate variation on trade balance: Evidence from Nigeria, 1975-200. Journal of Research in National Development. 9 (2), 393-403.
  • Pesaran, M. H., Shin, Y., Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(February 1999), pp. 289–326.
  • Pesaran, H. M., Shin, Y. (1995). An autoregressive distributed lag modeling approach to co integration analysis. DAE Working paper No. 9514, Department of Applied Economics, University of Cambridge.
  • Pesaran, H. M., Shin, Y. (1999). Autoregressive distributed lag modeling approach to co integration analysis. Chapter 11, in Econometrics and Economic Theory in the 20th.Century: The Ragnar Frisch Centennial Symposium, ed. by Storm, S., Cambridge University Press: Cambridge
  • Prais, S. J. (1961). Some mathematical notes on the quantity theory of money in an open economy. International monetary fund staff papers 8, No. 2, 212-226.
  • Shawa, M., Shen, Y. (2013). Analysis of the determinants of trade balance: Case study of Tanzania. International Journal of Business and Economics Research. 2 (6), 134-141.

Year 2019, Volume 6, Issue 1, 32 - 40, 30.03.2019
https://doi.org/10.17261/Pressacademia.2019.1026

Abstract

References

  • Abu-Lila, Z., Jdaitawi, Q. (2015). Bilateral trade elasticities of Jordan. Dirasat Journal: Administrative Science, 42 (2), 611-622.
  • Alhanom, I. (2016). Determinants of trade balance in Jordan. NG- Journal of social Development. 5 (2), 24-34.
  • Al-Sawaie, K. (2017). Determinants of Jordanian trade balance: An ARDL approach. Zarqa Journal for Research and Studies in Humanities.17 (1),138- 149.
  • Bahmani-Oskooee, M., Ratha, A. (2004). The J-Curve: A literature review. Applied Economics, 36 (13), 1377-1398.
  • Celik, S., Kaya, H. (2010). Real exchange rates and bilateral trade dynamics of Turkey: Panel co integration approach. Applied Economics Letters, 17 (8), 791-795.
  • Cergibozan, R., Ari, A. (2017). The exchange regime and trade balance in Turkey. The International Trade Journal
  • Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36 (1), 89-102.
  • Kyereme, S. (2002). Determinants of United States' trade balance with Australia. Applied Economics, 34 (10), 1241-1250.
  • Mundell, R. A. (1971). Monetary theory. Goodyear, Pacific Palisades, Calif., 1971.
  • Ogbonna, B. (2011). The impact of exchange rate variation on trade balance: Evidence from Nigeria, 1975-200. Journal of Research in National Development. 9 (2), 393-403.
  • Pesaran, M. H., Shin, Y., Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(February 1999), pp. 289–326.
  • Pesaran, H. M., Shin, Y. (1995). An autoregressive distributed lag modeling approach to co integration analysis. DAE Working paper No. 9514, Department of Applied Economics, University of Cambridge.
  • Pesaran, H. M., Shin, Y. (1999). Autoregressive distributed lag modeling approach to co integration analysis. Chapter 11, in Econometrics and Economic Theory in the 20th.Century: The Ragnar Frisch Centennial Symposium, ed. by Storm, S., Cambridge University Press: Cambridge
  • Prais, S. J. (1961). Some mathematical notes on the quantity theory of money in an open economy. International monetary fund staff papers 8, No. 2, 212-226.
  • Shawa, M., Shen, Y. (2013). Analysis of the determinants of trade balance: Case study of Tanzania. International Journal of Business and Economics Research. 2 (6), 134-141.

Details

Primary Language English
Subjects Social, Humanities, Multidisciplinary, Economics, Management, Business Finance
Journal Section Articles
Authors

Mutasem JALOUDİ This is me (Primary Author)

0000-0002-6190-9483


Omar HARB This is me

0000-0001-9230-6688

Publication Date March 30, 2019
Published in Issue Year 2019, Volume 6, Issue 1

Cite

APA Jaloudi, M. & Harb, O. (2019). DETERMINANTS OF JORDAN-TURKISH BILATERAL TRADE BALANCE . Journal of Economics Finance and Accounting , 6 (1) , 32-40 . DOI: 10.17261/Pressacademia.2019.1026

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