This paper aims at building a simple overall macroeconomic model of the Palestinian economy that can be utilized in the financial programming exercises of the PMA in line with Hussein, 1994. The model displays the inter-relationships between the major economic sectors (real sector which includes the households and firms, government sector, and the external sector). Financial sector is absent in this model as a result of the absence of a domestic currency, money supply and demand, and no sufficient data regarding major monetary data, which is normally derived from the monetary survey. The model can be used to simulate the short- and long-run effects of certain shocks to the economy’s real growth rate, budget deficit, and balance of payments position. Various policy exercises are suggested at the end of the paper and an illustration is provided on the impact on key macroeconomic variables.