Abstract

The current research paper analyses the equilibrium relationship between monetary policy and economic growth using autoregressive distributed lag approach over the period (1990 – 2020). The results showed that monetary policy instruments significantly influenced economic growth in Jordan. The present paper provides the following policy implications: (1) the growth of the economy should be the topmost consideration when implementing monetary policy. Strong macroeconomic policies (i.e., Jordan economic growth plan 2018-2022) should be pursued to stabilize the economy at large, (2) the regulatory and supervisory framework for the financial sector should be strengthened in order to assist the effectiveness of monetary policies of the government, (3) the central bank of Jordan should make more use of the cash reserve ratio in regulating the operations of commercial banks, and interest rate policy should be such that banks can efficiently intermediate funds in the economy.