Determinants of Private Investment: The Time Series Evidence from Jordan Using ARDL Approach

Sohail I Magableh, Sameh A Ajlouni

Abstract


ABSTRACT
This study investigates the determinants of private investment in Jordan for the period 1976-2012. The ARDL (Autoregressive Distributed Lag) approach to cointegration is employed to test the existence of a long run relationship as well as to study the short run dynamics of private investment in Jordan. To that end, demand for private investment is estimated as a function of real Gross Domestic Product (GDP), interest rate, public investment and exchange rate.

Econometric evidence indicates that private investment is positively related to real Gross Domestic Product (GDP) growth, and negatively related to real interest rates, and public investment. The study also indicates a negative impact of exchange rate depreciation on investment was crowded in private investment.

Keywords


Private Investment, Jordan, Real GDP, ARDL

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