Abstract

This study evaluated the impact of oil price changes on certain budget variables in Jordan over the period of 1992 to 2015. Time series data were analyzed using econometric techniques that included ordinary least squares. Findings from the analysis revealed a statistically significant positive correlation for oil price on government and tax revenues, external grants, and government expenditures, whereas oil price on budget deficits had a statistically significant negative correlation. Therefore, the study proposes that the government of Jordan directly invests its oil tax revenues in economic sectors, such as agriculture and manufacturing, to broaden the sources of revenue, as well as exploit such revenues to establish alternative energy projects, whether from the sun, wind, or both. In addition, the establishment of such projects is suitable for the conditions of the Jordanian environment.

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