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The purpose of this paper is to empirically compare and contrast the effect of the nature of the political regime vs the political instability (PI) on real output in a group of countries from the Middle East and North Africa (MENA) during the period 1980-2011. This part of the world has been going through a series of unstable political regimes and continuous PI events for over seven decades.

The author employs a time-series cross-sectional Prais-Winsten regression model with panel-corrected standard errors.

The author concludes that the relationship between the nature of the political regime and real output is mixed (negative and positive); this impact seems to get changed to a positive value whenever the regimes’ instability events are mitigated. However, the influence of PI on real output has a negative benchmark level. The author also notices that the effect of the political regime on real output is stronger over all the sample countries of the study. The results depart somehow from the previous studies’ findings. Therefore, the implication of the author’s conclusion is to investigate how and why the effects of these uncertainties turned positive.

The paper contributes to the literature from three perspectives. First, the author compares the effects on real output from different types of political system uncertainties. Second, the author extracts evidence on this topic from the most unstable region of the world, the MENA region. Third, the author uses a new econometric technique compared to the previous studies.

The purpose of this paper is to examine the hypothesis that a central bank's asymmetric preferences are able to explain inflation rate in a developing country. In addition, it seeks to help comprehend movements of inflation rate in Jordan and to understand Central Bank of Jordan preferences regarding inflation rate and output.

A standard monetary model consists of a central bank's loss function and an economy structure is constructed, which acts as a constraint on the central bank's behavior. Then, a distribute‐lag version of the derived model is estimated using ordinary least squares method.

The empirical evidence from the Jordanian economy shows that inflation rate relies on the variances of inflation rate and the variances of output. This finding supports the hypothesis that a central bank's asymmetric loss function is able to justify inflation rate movements. Moreover, the Jordanian central banker prefers higher inflation rate and higher level of output.

The paper provides evidence from a developing country regarding the ability of the asymmetric central bank preferences to justify inflation rate movement. In addition, the paper links central banks' losses with the uncertainty level and inflation rate in the economy.

The purpose of this paper is to examine the inertia of monetary policy in the Jordanian economy, in which the monetary policy is neutral owing to the adoption of a fixed exchange rate with the US dollar. The question of the current paper is: Does monetary policy inertia exist in such an economy despite the fact that the exchange rate is pegged to a foreign currency?

To test the hypothesis of the current paper in Jordan, the Taylor rule, adjusted to be consistent with the context of monetary policy in Jordan, is estimated. Moreover, the model is estimated by two techniques: OLS and the Kalman filter, using quarterly data over the period (1994:1‐2007:1).

The empirical evidence from the Jordanian economy shows that monetary policy inertia is highly significant in Jordan. The coefficient of the lagged interest rate is estimated to lie between 0.60 and 0.69. Moreover, the evidence illustrates that both inflation rate and output gap have an insignificant effect on setting the policy rate. Further, the policy interest rate seems to be set gradually in reaction to monetary policy inertia, unobserved variable and foreign interest rate.

The paper investigates monetary policy inertia in a developing country whose economy is small, widely open and has a fixed exchange rate with the US dollar.

The purpose of this paper is to examine the extent to which a flexible exchange rate system is able to function given a least developed economy where financial markets are inactive and economic growth is low.

A theoretical general equilibrium model is developed to examine the determinacy of a flexible exchange rate system on a small open market economy on the verge of subsistence. Using data from Sudan, an empirical analysis is conducted to find support for the theoretical results.

The theoretical analysis finds that in economies on the verge of subsistence with inactive financial markets, a flexible exchange rate system is indeterminate and thus will not work. In support of the theoretical results, the empirical analysis indicates that the financial deepening of an economy has a significant positive impact on the determinacy of the exchange rate.

The robustness of the empirical results would be strengthened by examining the significance of financial deepening on exchange rates for additional economies with a large subsistence sector beyond Sudan.

A policy recommendation for economies on the verge of subsistence such as Sudan is to develop their financial institutions in order to increase their competitiveness in the exchange rate market. Moreover, future empirical studies on the impact of exchange rate changes should include monetary variables in order to reflect the degree of an economy's financial market advancement.

The paper illustrates that under conditions of subsistence, general equilibrium models of devaluation are determinant only when supply functions are based on absolute prices and not relative prices.