Economic Growth, External Debt and Budget Deficit in Jordan: ARDL Approach

Abstract

The current study aims to investigate the impact of  economic growth and external debt on budget deficit  in  Jordan for the period (1993-2017), the study used unit root test, autoregressive distributive lag (ARDL) approach , Bound test,  to examine the study hypotheses.  ARDL bound test  and ARDL cointegration proven that there is a long run relationship exists between economic growth, external debt and budget deficit in Jordan. The ARDL long run coefficients  show  that economic growth has a negative significant impact on budget deficit while external debt  has a positive significant impact . In the short run  the empirical results show that the budget deficit lags (1,2) have a positive and significant impact on current budget deficit   while external debt lags (2, 3) have negative significant impact on budget deficit in Jordan.