Acta Univ. Agric. Silvic. Mendelianae Brun. 2020, 68, 1011-1018
Published online 2020-12-17

The Impact of Monetary Policy and Tax Revenues on Foreign Direct Investment Inflows: An Empirical Study on Jordan

Shahriyar Mukhtarov1,2, Mustafa Mohammad Alalawneh3, Mayis Azizov1, Farid Jabiyev1

1Department of World Economy, Baku Engineering University, Hasan Aliyev 120, Khirdalan, Baku AZ0101, Azerbaijan
2UNEC Empirical Research Center, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, Baku AZ1001, Azerbaijan
3School of Economics and Management, Khazar University, 41 Mehseti Str., Baku AZ1096, Azerbaijan

Received October 1, 2019
Accepted November 15, 2020

The study examines the impact of monetary policy (proxied by money supply and interest rate) and tax revenue on foreign direct investment (FDI) in Jordan employing time series data period from 1991 to 2017. The Vector Error Correction Model (VECM), the Canonical Cointegrating Regression (CCR) and the Fully Modified Ordinary Least Squares (FMOLS) methods are applied in empirical estimations. Estimation results reveal that money supply has a positive and statistically significant impact on the FDI while, tax revenue has a negative impact on FDI in Jordan. Also, we find that the impact of interest rate is statistically insignificant.The results of current study are useful for the policymakers to formulate appropraite policies and support the literature for further researches in the case of developing economies.


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