Measuring and analyzing the relationship between monetary policy and the public budget in Iraq for the period (2004-2023)

Abstract

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The research aims are to verify the existence of a long-term correlation between monetary policy represented by the broad money supply and the public budget for from 2004 to 2023 using the ARDL bounds test method for joint integration, after testing the stability of the time series using the approved tests based on annual data. The research results confirmed the existence of a correlation between the research variables. The standard method proved the existence of an inverse relationship between the independent variable (M2), which symbolizes the broad money supply, and the public budget variable (BD), thus accepting the research hypothesis. With a long-term positive relationship between the gross domestic product and the public budget. As a result, the research recommends the necessity of establishing a more effective monetary policy to achieve the goals of internal balance by managing the money supply in line with the state of the economy and working to direct and rationalize public spending to reduce the aggravation of the public budget deficit.