Determinants of Jordanian Trade Balance: An ARDL Approach

This study examines the short-term and long-term relation between trade balance, the income, the money supply and the real effective exchange rate of the Jordanian economy by using the Bounds Testing Approach (BTA) and Error Correction Model (ECM) in the framework of ARDL to verify the existence of a stable relationship in the long – run between the trade balance and its determinants in the period 1976- 2013. The results of the (BTA) show that the money supply and the income play a strong role in determining the behavior of the trade balance, and the exchange rate improves the trade balance.