The Relationship between Inflation and its Uncertainty: Evidence from Jordan

Authors

  • Izz Eddien N. Ananzeh Philidelphia University

Abstract

There are many harmful impacts of inflation and inflation volatility in any economy, which includes increasing the risk premium, costs of hedging, and consequently leads to re-distribution of national income between strata of society unfairly. Therefore, this study came to test the relationship between inflation and inflation uncertainty for Jordan from 1976 to 2013. For that purpose we employing two different methodologies generalized autoregressive conditional heteroscedasticity GARCH process, and the granger causality technique. The results of the GARCH model support the hypothesis of Friedman & Ball through Indicating strong support for the presence of a positive relationship between the inflation rate and its uncertainty. The Granger causality results report supporting hypothesis of Cukierman and Meltzer in 1986, and also Granger causality test running in the both ways.

Keywords: GARCH model; Granger Causality Test; Inflation; Inflation Uncertainty

JEL Classifications: C1; D8; E31

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Author Biography

Izz Eddien N. Ananzeh, Philidelphia University

Faculty of Administrative & Financial SciencesBanking & Finance Department 

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Published

2015-10-16

How to Cite

Ananzeh, I. E. N. (2015). The Relationship between Inflation and its Uncertainty: Evidence from Jordan. International Journal of Economics and Financial Issues, 5(4), 929–932. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/1447

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