The Demand for Money in Jordan: ‎Evidence from Cointegrartion ‎Analysis

The goal of this paper is to investigate the money demand function in Jordan by employing the ‎cointegration analysis proposed by Engle and Granger, and extended by Johansen. By using ‎Johansen procedure the relative importance of each variable explaining the money demand ‎function is identified.‎ Generally it was found that all suggested variables are nonstationary. This consequently sheds ‎some doubts on previous studies based on conventional methods of estimation. Also, the ‎study found that there exists a long run relationship among money income and interest rat