MONETARY INTEGRATION BETWEEN THE ISRAELI, JORDANIAN AND PALESTINIAN ECONOMIES

The peace process between Israel and the Palestinians raises some inte resting economic questions concerning integration between the West Ban k, Gaza and Israel. Past and current arrangements between Israel, the occupied territories and Jordan are described, especially the flows of goods and labour. The authors' findings indicate that Israel, the Wes t Bank and Gaza were closely integrated, whereas economic integration between the occupied territories and Jordan was much weaker. Based on these circumstances of the past, the (imposed) monetary union between Israel and the Palestinian economy was warranted. However, optimal mon etary arrangements in the future will depend on the extent of changes in real flows and on a satisfactory settlement of the seigniorage issu e.