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SCOPUS 학술저널

The Role of Monetary Policy Tools on Stability of Iraqi Economy

Due to the global financial crisis, monetary coordination and macroeconomic stability are now important for domestic and fiscal policies. This study examines the effects of monetary policy on financial and economic stability after the economic lockdown resulting from the COVID-19 pandemic. For time-series data models, this article used a V.A.R. (Vector Autoregressive Models) estimator. From the first quarter of 2004 to the first quarter of 2018, data are collected quarterly. The study examines the causal relationships between monetary policy tools and economic stability using a V.A.R. model. The results indicate that Iraq’s monetary policy is most effective at stabilizing the money supply at a targeted growth rate while also combating inflation by putting an equal cap on it (1.8 percent). The money supply had a small effect due to the rentier nature of the Iraqi economy. To provide public spending, the monetary authorities must monetize oil revenues. Finally, a suitable environment must be provided for monetary management, which keeps monetary independence and dominance free from interference. The findings provide an in-depth understanding of the relationships between national monetary policies and economic stability, which can eventually help formulate sound planning of monetary policy and fiscal policy in developing countries.

1. Introduction

2. Literature Review

3. Data and Methodology

4. Results and Discussion

5. Conclusion

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