Abstract
<p>This paper aims at examining the causality between Palestine, Jordan, and Israel economics using three macroeconomic (governmental accounting) measurement indices: Gross Domestic Product [GDP], Inflation Rate [IR] and Unemployment Rate [UR]. In order to achieve this purpose, this manuscript employs a macroeconomic time series analysis on data gathered Palestine, Jordan, and Israel from 1997-2014. The paper employs a variety of econometric statistical methods (e.g. descriptive statistics, correlation tests, ordinary least squares, and Granger causality test). The findings of this paper statistically support the notion that both GDP in Israel and GDP in Jordan effects the Palestinian GDP. These findings put an emphasis on the dependency of the Palestinian economy on both the Jordanian and Israeli economies. Furthermore, in lieu of the findings, this study recommends that fiscal policy makers in Palestine exert serious efforts to attract additional foreign and expatriate investments, attempt to create a stable and attractive entrepreneurial and investment climate, and build national support for local products and services to minimize the interdependence. These recommendation could inspire greater confidence in the Palestinian economy and help create a better investment climate.</p>
Highlights
The interconnectedness between Palestinians and Jordanians economies has been present in light of shared historical, cultural and social ties
The data were collected from their secondary sources as they were published by the World Bank, Palestinian government, Jordanian government, and Israeli government
The time series was taken for each country from 1997-2014 (18 observations)
Summary
The interconnectedness between Palestinians and Jordanians economies has been present in light of shared historical, cultural and social ties. The same cannot be said about the interdependence between the Israeli and Palestinian economies which started shortly after the creation of the state of Israel as a consequence of Israeli occupation of Palestine. Since the creation of the Palestinian National Authority the interdependence of the Palestinian and Israeli economies has been formalized since 1993 when the Palestinian authority signed the Oslo Accord with the Israeli side. The protocol of Paris organizes the economic issues between the Palestinian Authority and Israel while the Oslo agreement arranges the political issues. Shmuel (2013) shows that there is a strong relationship between the interest rate in the United States and Canada. (Mclister, 2009) states that there is a strong relationship between the inflation rates in both the Canadian and American economics. Garfinkle (2013) shows that there is interdependence between Israel and the United States of America www.ccsenet.org/ibr
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