The Effect of Oil Prices on Economic Growth in Jordan

Abstract

This study aimed to show the effects of oil prices on economy of Jordan, and measure the effect of price changes on such macroeconomic variables in Jordan, and the price changes that passed through to the final consumer of gasoline (90 and 95) and kerosene. To achieve the objectives of this study, it was divided into four parts. Part I reviewed the literature concerning the relationship between oil prices and macroeconomic variables. Part II  showed the relations between the economic problem and energy sector in Jordan. Part III showed the econometric models to measure the effect of price changes of oil on the economy in Jordan. Part IV discussed the results of the study.  Finally, a number of findings were concluded; most notably, the price of oil affected the dependent variable which resembled the oil productivity of the economic growth, a reduction in the oil price reinforced increasingly the oil productivity consumed in the average of the economic growth, and the maximum value of oil price affected negatively the contribution of oil in the economic growth.