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Monetary Integration Between the Israeli, Jordanian and Palestinian Economies

Author

Listed:
  • Arie Arnon

    (Ben­ Gurion University of the Negev, Bank of Israel)

  • Avia Spivak

    (Ben ­Gurion University of the Negev)

Abstract

The peace process between Israel and the Palestinians raises some interesting economic questions concerning integration between the West Bank, Gaza and Israel. In this paper we describe past and current arrangements between Israel, the occupied territories and Jordan, focusing particularly on trade and labour flows. We then compare the similarity of economic performance of the four regions, employing recent developments in the statistical analysis of macroeconomic data due to Blanchard and Quah (1989), which enable to extract the shocks to the economies. Our findings indicate that under the past and current economic relations, Israel, the West Bank and Gaza were closely integrated, whereas economic integration between the occupied territories and Jordan was much weaker. Based on these past circumstances, the (imposed) monetary union between Israel and the Palestinian Economy was warranted. However, optimal monetary arrangements in the future will depend on the extent of changes in real flows and on a satisfactory settlement of the seigniorage issue.

Suggested Citation

  • Arie Arnon & Avia Spivak, 1995. "Monetary Integration Between the Israeli, Jordanian and Palestinian Economies," Bank of Israel Working Papers 1995.11, Bank of Israel.
    • Handle: RePEc:boi:wpaper:1995.11
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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