The Effect of Exchange Rate on Exports and Imports: The Case of Jordan

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15 Citations (Scopus)


This article aims at exploring the effect of exchange rate on exports and imports in Jordan over the 1976-2009 period. In addition, it tests if Jordan's workers' remittances create an effect, equivalent to "the Dutch disease effect," on Jordan's exports competitiveness, and it computes Marshall-Lerner condition to check the foreign exchange market stability. We employ the bounds testing approach to cointegration and the error correction model. We find that Jordan's competitiveness has a trend of deterioration. The influence of Jordan's exchange rate on exports and imports is active in the short-run only. Additionally, Jordan's workers' remittances have an impact similar to "the Dutch disease effect" via increasing the cost of living, thus reducing exports competitiveness. Also, Marshall-Lerner condition is less than one; the foreign exchange market will be unstable if exchange rate policy devaluation is adopted. The policy implication of the article is against adopting a devaluation policy in Jordan.

Original languageEnglish
Pages (from-to)156-172
Number of pages17
JournalInternational Trade Journal
Issue number2
Publication statusPublished - 2013


  • Dutch disease
  • Jordan economy
  • Marshall-Lerner condition
  • demand for real imports and real exports
  • real effective exchange rate

ASJC Scopus subject areas

  • General Economics,Econometrics and Finance
  • Business and International Management


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