The Effectiveness of Fiscal Policy in Targeting Inflation in Jordan

The present studyexplored the impact of the fiscal policy on inflation in Jordan. The researchers adopted an analytical approach to explore the impact of direct and indirect taxes on the consumer price index in Jordan. They carried out time series analysis for the period (1992 – 2000). The model includes the following variables: 1)-the consumer price index (dependent variable). 2)- Direct taxes, indirect taxes, import price index, and real GDP (independent variables). The researchers concluded that the direct taxes have negative significant impact on the consumer price index. They found that there is a significant and positive effect for indirect taxes, the import price index, and the real GDP on the consumer price index. They recommend analyzing the financial policy of the Central Bank in a periodical manner to explore the impact of the tools of the financial policy on the consumer price index (i.e. inflation).