Inflation in developing countries: The case of Jordan.

Since the early 1970s, Jordan like many other developing countries, has experienced significant inflationary pressure in the course of economic development. However, the overall aim of this thesis is to identify analytically and empirically the factors which have contributed to the process of inflation in Jordan, and consequently it is hoped to contribute to the debate on the cause and effect of inflation in LDCs. This objective, achieved throughout many analytical and empirical investigations, begins with analysing the difficulties which arise in studying inflation in developing countries, and at the same time, highlights the theoretical and practical argument for and against inflation in these countries. Thus, the thesis has taken a selective review of the theoretical and empirical explanation of inflation in LDCs. Moreover, it has also investigated some of the literature, concerning the relationship between inflation and economic growth in LDCs, at the same time, providing an analytical and empirical examination with reference to inflation and economic growth in Jordan as well as identifying the main factors which have led to the rapid economic growth in Jordan. With respect to the cause of inflation, the thesis has submitted an analytical and empirical examination of the contributing factors which are held responsible for the inflation process in Jordan. In addition, the cause of inflation in Jordan has been analyzed by producing and testing a replica of the monetarist model, structuralist model, combined model and by conducting some forms of modification by either utilizing Ordinary Least Squares, or by utilizing Cochrane-Orcutt method when it becomes necessary. Finally, it has also offered a recommendation for both policy makers and planners, on the grounds of empirical findings and also the current economic climate that has prevailed in Jordan.