Fiscal Policy Interaction with Private Investment: The Case of Jordan

Abstract

The purpose of this study was to find the impact of fiscal policy on private investment in Jordan. Stepwise regression method was utilized for this purpose. The model expresses private investment (PI) as a function of various levels and components of fiscal policy that include current expenditure (CE), capital expenditure (CI), internal public debt (IPD), external public debt (EPD), and tax revenue (TR). The statistical results indicate that the most effective variable on private investment in Jordan is current expenditure. We found that the coefficient of determination = 0.78 which is reflect the importance of this variable on private investment in Jordan. Recommendations were given based on results.