PMA Publishes a Paper on the Effect of Exogenous Factors on the Performance of External Sector in Palestine

The Research and Monetary Policy Department in the PMA issued a working paper entitled "The effect of exogenous factors on the performance of external sector in Palestine". 

The study investigates the impacts of domestic demand (consumption and investment), GDP growth rate in Palestine, GDP growth rate in Israel, credit to private sector and number of closure days on the export performance of Palestine over the period 2000Q1-2013Q3 using vector error correction model (VECM) under time series framework. The empirical results indicate a long-run equilibrium relationship among the variables. 

The study also found a significant short-run relationship between the growth rate in Israel and the Palestinian exports (positive relationship) and between the number of closure days and the performance of exports (negative relationship).

The study concludes that Palestinian government should manage efficient trade policies with Israel and negotiate the opening of cross-borders and ports with neighboring countries.

For a working paper, please click here