The Impact of Monetary and Fiscal Policies on Stock Returns in the Jordanian Amman Stock Exchange Case

Abstract

The paper aims to discuss the impact of the monetary and fiscal policies on stock returns in Amman stock exchange in Jordan during the period 2006 to 2016. The analytical descriptive approach was adopted when collecting the required data. A model was developed for conducting a multiple regression analysis. The paper found that between 2006 and 2016, there was a statistically significant positive impact for inflation on the stock returns in Amman stock exchange. Moreover, there was a statistically significant causal relationship between the stock returns in Amman stock exchange from one hand and inflation and interest rate from another hand. There was also a long run co-integration relationship between all the investigated variables of the monetary and fiscal policies from one hand and the stock returns in Amman stock exchange from another hand. The paper suggests taking the nature of the relationship between the variables of the monetary and fiscal policies and the stock returns in Amman stock exchange into consideration when setting policies by the government.

Keywords: Monetary Policies, Fiscal Policies, Stock Returns, Amman Stock Exchange.