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Trade Openness, Energy Consumption, and Financial Development Influence on Jordan’s Economy: Evidence from ARDL and Non-Granger Causality Test Approach

Author

Listed:
  • Baha Aldeen Mohammad Fraihat

    (Department of Administrative Sciences, Faculty of Business, Jerash University, Jordan)

  • Asma’a Al-Amarneh

    (Department of Financial and Accounting Sciences, Faculty of Business, Middle East University (MEU), Amman, Jordan,)

  • Hadeel Yaseen

    (Department of Finance, Faculty of Business, Applied Science Private University, Jordan,)

  • Miral R. Samarah

    (Finance and Banking Department, Faculty of business, Applied Science Private University, Jordan.)

  • Bashar Younis Alkhawaldeh

    (Department of Administrative Sciences, Faculty of Business, Jerash University, Jordan)

  • Ola Buraik

    (Department of Accounting, Faculty of Business, Jerash University, Jordan.)

Abstract

The purpose of this study is to analyze the effect of trade openness, energy consumption, and financial development on Jordan's economic development using the Autoregressive Distributed Lag (ARDL) method. By looking at data from 1970 through 2022, the study reveals a short- and long-term impact. Short-term economic development was found to be positively influenced by energy consumption but negatively influenced by trade openness and financial development. However, financial development has a favourable effect on economic development in the long run, whereas trade openness and energy consumption have a negative effect. Furthermore, evidence of a nonlinear bidirectional causal relationship between trade openness and economic development, and evidence of a one-way causal relationship between energy consumption and economic development, were found by the results of Diks and Panchenko's Granger causality test. The development of the economy and the financial sector also demonstrated a reciprocal causal relationship. These findings have important implications for policy and strategic planning for Jordan's economic growth and underscore the need to carefully weigh the potential costs and gains of trade liberalization, financial sector development, and energy consumption.

Suggested Citation

  • Baha Aldeen Mohammad Fraihat & Asma’a Al-Amarneh & Hadeel Yaseen & Miral R. Samarah & Bashar Younis Alkhawaldeh & Ola Buraik, 2023. "Trade Openness, Energy Consumption, and Financial Development Influence on Jordan’s Economy: Evidence from ARDL and Non-Granger Causality Test Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 659-665, November.
    • Handle: RePEc:eco:journ2:2023-06-69
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    References listed on IDEAS

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    Cited by:

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    2. Mohammad Nassar Almarshad & Suad Abdalkareem Alwaely & Bashar Younis Alkhawaldeh & Mosa Qasim Hasan Al Qaryouti & Ahmad Y. A. Bani Ahmad, 2024. "The Mediating Role of Energy Efficiency Measures in Enhancing Organizational Performance: Evidence from the Manufacturing Sector in Jordan," International Journal of Energy Economics and Policy, Econjournals, vol. 14(4), pages 360-370, July.
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    4. Kazeem Abimbola Sanusi & Zandri Dickason-Koekemoer, 2024. "Trade Openness, Financial Development and Economic Growth in Lesotho: BVAR and Time-varying VAR Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 66-75, May.

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    More about this item

    Keywords

    ARDL; Jordan; Economic Development; Energy Consumption; Financial Development; Trade Openness;
    All these keywords.

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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