Shanaz Mhamad; Roshna Ibrahim
Abstract
Inflation is a macroeconomic issue that has drawn the attention of financial analysts, policymakers, and monetary officials in both developed and developing countries. Iraq has had ...
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Inflation is a macroeconomic issue that has drawn the attention of financial analysts, policymakers, and monetary officials in both developed and developing countries. Iraq has had high inflation rates since the fall of the former regime in 2003, due to an overdependence on oil revenues and the importation of enormous goods and services, particularly from neighboring countries that are also experiencing inflation. Furthermore, due to Covid-19 and the political uncertainty in Iraq, the rate of inflation changed between 2019 and 2020. This study examine the short- and long-term effects of inflation on Iraq's economic growth. The Autoregressive Distributed Lag (ARDL) bound test approach was employed, with data ranging from 1990 to 2020. In Iraq, the study found that inflation has statistically significant effect on GDP in the short term. The result also revealed that the estimated model's dependent variable and explanatory variables have no long-term relationship. To summarize, inflation control necessitates achieving a proportional level of economic and pricing activities, in which the money-to-income ratio grows steadily in line with financial expansion and macroeconomic stability
