MThe Interchangeable Relationship between Exchange Rate, Money Supply and Inflation rate in Iraq for the period of (2003-2023)

Rashid, Farhad; Rostam, Biaban; Ahmad, Younis

doi:10.24271/garmian.2024.1116

MThe Interchangeable Relationship between Exchange Rate, Money Supply and Inflation rate in Iraq for the period of (2003-2023)

Document Type : Original Article

Authors

Farhad Rashid ¹

Biaban Rostam ²

Younis Ahmad ³

¹ Tourism Department, College of Commerce, University of Suleimani, Kurdistan Region – Iraq

² department of Law, University of Garmian, Kurdistan Region – Iraq

³ Administration and Economics, University of Suleimani

https://doi.org/10.24271/garmian.2024.1116

Abstract

This study investigates the interplay among Iraq's money supply, inflation rates, and exchange rates over a two-decade span from (2003 to 2023). Annual data for the specified period were gathered for the money supply, exchange rates, and inflation rates. Employing the Autoregressive Distributed Lag (ARDL) approach in E-Views 12, a comprehensive Multiple Regression Analysis was conducted. Based on the results of the analysis, it appears that there is a one-way causal relationship between the money supply and inflation, as well as between the exchange rate and inflation. Moreover, the money supply and the exchange rate have an impact on increasing inflation rate. Additionally, the inflation rate and the exchange rate have an impact on increasing money supply. The robustness of the models is confirmed through an array of statistical analyses, including descriptive statistics, unit root tests, co-integration analysis, and diagnostic checks.

The outcomes of this research provide valuable insights for decision-makers, facilitating a comprehensive understanding of Iraq's economic dynamics. Furthermore, these findings contribute to the development of well-informed strategies for future economic initiatives.

Keywords

Money Supply

Exchange Rate

Inflation Rate

ARDL