Measuring and Analyzing the Impact of monetary policy on Inflation in Iraq for the Period (2004-2023): Measuring and Analyzing the Impact of monetary policy on Inflation in Iraq

Sazan Taher Saeed

doi:10.63841/iue32661

Authors

Sazan Taher Saeed Department of Economics, College of Administration and Economics, University of Sulaimani, Kurdistan Region, IRAQ Author https://orcid.org/0009-0002-3384-6849

DOI:

https://doi.org/10.63841/iue32661

Keywords:

Inflation rate, Money Supply (M2), Interest Rate, Exchange Rate, Iraq, Time Series Analysis

Abstract

This study examines the impact of monetary policy on the inflation rate in Iraq during the period 2004–2023. Annual data was used, the analysis models inflation rate as the dependent variable, while money supply (M2), interest rate, and exchange rate as the independent variables. Also tries to measure and analyze the impact of monetary policy on inflation in Iraq during the period from 2004 to 2023. To achieve this objective of fulfilling its full potential, present paper adopts FMOLS approach, and the secondary data was used during the period of (2004 -2023). The results are consistent with economic theory and some other studies in the sense that there is a positive relationship between money supply (M2) and inflation. Specifically, a 1% increase in M2 is related with a 9.47% increase in inflation rate, highlighting its significant effect. On the other hand, the analysis exposes a negative relationship between interest rates and inflation rate: a 1% increase in the interest rate leads to a 5.47% decrease in inflation rate in Iraq. Furthermore, the coefficient of exchange rate (EXR) is 0.0574 suggests that a rise of the exchange rate results in a 0.057% increase in inflation rate. Depended on the results, the study achieves that relying only on monetary policy is insufficient for controlling inflation rate. It recommends a coordinated method that includes fiscal policy and other non-monetary tools to effectively manage inflation rate in Iraq.

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Author Biography

Sazan Taher Saeed, Department of Economics, College of Administration and Economics, University of Sulaimani, Kurdistan Region, IRAQ

Sazan Taher Saeed ahmed, a lecturer specializing in Economics at the College of Administration and Economics, University of Sulaimani, in the Kurdistan Region. she holds Ph.D. in the field of Economics. She had published approximately 7 articles.

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Data Source: Iraqi Central Bank, available on: https:// www.cbi.iq.

Measuring and Analyzing the Impact of monetary policy on Inflation in Iraq for the Period (2004-2023)