ISSN: 2226-3624
Open access
This study aims to investigate the effect of government support for Fuel and Wheat on economic growth in Jordan. This study employs the time series data from 1970-2019. Furthermore, this study applies the powerful unit root to test the stationarity of the variables. The unit root tests are Augmented Dickey-Fuller, Phillips-Perron, Saikonen and Lütkepohl and Zivot-Andrews. Moreover, this study also uses a recent cointegration test developed by Gregory and Hansen to investigate the long-run effect of government support for fuel and Wheat on economic growth. Similarly, this study uses dynamic autoregressive distributive lags. The results of unit root tests show that all the variables are stationary. Also, the results of the cointegration test reveal the long-run effect of government support for fuel and Wheat and trade openness on economic growth in Jordan. Similarly, the long-run and short-run estimates reveal the positive effects of both government support for fuel and Wheat and trade openness on economic growth, respectively. While the 2015 food crisis shows a negative effect on economic growth, conclusively, the policy will be contributed to Jordan to optimize the effects of government support for fuel and Wheat in economic growth. It is also recommended that if government support is utilized in the excess amount, the excessive development support becomes unproductive at the margin. Moreover, fiscal policy can be used as a macroeconomic instrument for economic stability. Intensive government support should be employed as an investment by allocating the funds to productive sectors. In addition, the government needs to make sure that increment in government support does not hurt the economy, particularly the economy of people within the country.
Abu-Eideh, O. M. (2015). Causality between public expenditure and GDP growth in Palestine: An econometric analysis of Wagner's law. Journal of Economics and Sustainable Development, 6(2), 189-199.
Al-Fawwaz, T. M. (2016). The impact of government expenditures on economic growth in Jordan (1980-2013). International Business Research, 9(1), 99.
Al-Shatti, A. S. (2014). The Impact of Public Expenditures on Economic Growth in
Ang, J. B. (2008). What are the mechanisms linking financial development and economic growth in Malaysia?. Economic Modelling, 25(1), 38-53.
Chinweoke, N., Ray, N., & Paschal, N. (2014). Impact of government expenditure on Nigeria's economic growth (1992-2011). The Macro theme Review: A Multidisciplinary Journal of Global Macro Trends, 3(7), 79-87.
Coady, D. P., El Said, M., Gillingham, R., Kpodar, K., Medas, P. A., & Newhouse, D. L. (2006). The magnitude and distribution of fuel subsidies: evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka.
Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American statistical association, 74(366a), 427-431.
Dickey, D. A., Hasza, D. P., & Fuller, W. A. (1984). Testing for unit roots in seasonal time series. Journal of the American Statistical Association, 79(386), 355-367. ?
Eagle, D., & Stephanedes, Y. J. (1987). Dynamic highway impacts on economic development. Transportation R
Elliott, G., Rothenberg, T. J., & Stock, J. H. (1996). Efficient Tests for an Autoregressive Unit Root. Econometrics 64 (4): 813–836.
Gemmell, N., Kneller, R., & Sanz, I. (2016). Does the Composition of Government Expenditure Matter for Long?Run GDP Levels? Oxford Bulletin of Economics and Statistics, 78(4), 522-547.
Gregory, A. W., & Hansen, B. E. (1996). Practitioners corner: tests for cointegration in models with the regime and trend shifts. Oxford Bulletin of Economics and Statistics, 58(3), 555-560. ?
Kwiatkowski, D., Phillips, P. C., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root? Journal of econometrics, 54(1-3), 159-178.
Lanne, M., Lütkepohl, H., & Saikkonen, P. (2002). Comparison of unit root tests for time series with level shifts. Journal of time series analysis, 23(6), 667-685. ?
McClelland, D. C. (2019). The achievement motive in economic growth. In The Gap Between Rich and Poor (pp. 53-69). Routledge. ?
Menyah, K., & Wolde-Rufael, Y. (2010). CO2 emissions, nuclear energy, renewable energy, and economic growth in the US. Energy Policy, 38(6), 2911-2915. ?
Ng, S., & Perron, P. (2001). Lag length selection and the construction of unit root tests with good size and power. Econometrica, 69(6), 1519-1554.
Olulu, R. M., Erhieyovwe, E. K., & Andrew, U. (2014). Government expenditures and economic growth: The Nigerian Experience. Mediterranean Journal of social sciences, 5(10), 89.
Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.
Saberi, M., & Hamdan, A. (2019). The moderating role of governmental support in the relationship between entrepreneurship and economic growth: A study on the GCC countries. Journal of Entrepreneurship in Emerging Economies, 11(2), 200-216. ?
Shahbaz, M., Zeshan, M., & Afza, T. (2012). Is energy consumption effective in spurring economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests. Economic Modelling, 29(6), 2310-2319. ?
Sharma, S. S. (2010). The relationship between energy and economic growth: empirical evidence from 66 countries. Applied Energy, 87(11), 3565-3574. ?
Torruam, J. T., Chiawa, M. A., & Abur, C. C. (2014). Cointegration Analysis of Public Expenditure on Tertiary Education and Economic Growth in Nigeria. CBN Journal of Applied Statistics, 5(2), 137-146.
World Bank. (2009) https://databank.worldbank.org/source/world-development-indicators: Accessed on December 2009.
Zaitseva, O. P., Kozlova, O. A., Blinov, O. A., Novikov, Y. I., & Golova, E. E. (2018). The Potential Volume of Government Support for a Region’ s Agricultural Sector in a Climate of Import Substitution. The Journal of Social Sciences Research, 392-399. ?
In-Text Citation: (Alkhawaldeh & Mahmood, 2021)
To Cite this Article: Alkhawaldeh, B. Y., & Mahmood, S. (2021). The Effect of Government Support for Fuel and Wheat on Economic Growth in Jordan: An Application of Dynamic Autoregressive-Distributed Lag. International Journal of Academic Research in Economics and Managment and Sciences, 10(1), 100-113.
Copyright: © 2021 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode