Nexus between Macroeconomic Factors and Economic Growth in Palestine: An Autoregressive Distributed Lag Approach

Abstract

All countries are trying their best to achieve maximum economic prosperity through employing efficient economic strategies. Countries seem to be conscious of various factors that can potentially affect economic growth. Given that, the current study examines the impact of various macroeconomic factors on the economic growth of Palestine. By employing the large range of quarterly data spanning from 2001 to 2020, the statistical outputs of the ARDL model show that government debt, donations, government expenditures, and unemployment rate adversely impact economic growth. However, other factors including credit facilities, inflation, and total investments positively impinge upon the economic growth of Palestine. Such dynamic impacts of various macroeconomic factors display both the detrimental and growth-promoting role of macroeconomic factors in determining economic prosperity. Our analysis suggests various policy implications to economic policy officials regarding the effectiveness of various factors for economic health. It is further recommended that international agencies working in aid- and donation-intensive countries should design efficient economic policies that can help such economies in coming out from economic distress.

Keywords

• ARDL
• economic growth
• macroeconomic factors
• Palestine economy