Interest rate pass-through: The case of Jordan

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2 Citations (Scopus)


The paper seeks to explore empirically the long-run relationship between short-term policy interest rate and deposit and lending rates in Jordan. Technically, we examine the speed of adjustment and pass-through from policy rate to deposit and lending rates. The empirical evidence of the Jordanian economy shows deposit and lending rates adjust primarily in response to the previous period's departure from the long-run equilibrium. Further, retail interest rates follow a symmetric movement for their deviations from the long-run equilibrium. Accordingly, the CBJ has the power to control the spread between deposit and lending rates. Furthermore, deposit rate adjusts larger and faster than lending rate for a deviation from the long-run equilibrium. As a result, Jordan's monetary policy action needs approximately 11 quarters to be effective.

Original languageEnglish
Pages (from-to)13-27
Number of pages15
JournalEkonomska Istrazivanja
Issue number1
Publication statusPublished - 2011
Externally publishedYes


  • Central bank
  • Error correction model
  • Interest rate pass-through
  • Monetary policy
  • Symmetric adjustment

ASJC Scopus subject areas

  • Economics and Econometrics


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