Measuring and Analyzing the Impact of Public Debt on Investment in Iraq for the period (2004 -2019)

الملخص

In the recent economic literature, there has been a great deal of discussion about the impact of public debt on investment. Many economists and other observers have viewed the public debt as harmful to the economy. The supposed harmful impacts include crowding out of investment due to raising interest rates. This paper re-examines the real impact of public debt on investment in Iraq. A time series analysis for the period between 2004 and 2019 has been used. It applies the ARCH model co-integration framework based on data from the central bank of Iraq, the World Bank, previous studies, etc. Based on the analysis as well as the results reached, it has been shown that there is a positive impact of public debt on total investment in Iraq, suggesting that reasonable levels of borrowing by a developing country are likely to enhance its economic growth and investment. This relation is different from other factors taken in this study, including inflation, GDP, and interest rates.