Measuring and analyzing the impact of oil price fluctuations on foreign trade in Iraq for the period (2004-2023)

Abstract

This study aims to measure and analyze the impact of oil price fluctuations in Iraq during the period 2004–2023. The study relied on time series data issued by the World Bank and the Central Bank of Iraq. The Autoregressive Distributed Lag (ARDL) model was used to measure the relationship between the study variables, with foreign trade as the dependent variable, while oil prices were the main explanatory variable. In addition, the study incorporated other economic variables: oil revenues, inflation, and the exchange rate as control variables that can affect foreign trade in the long and short term. The study also used the Error Correction Coefficient (ECM). The long-term results of the study showed a significant positive relationship between foreign trade and oil revenues, while a significant negative relationship was found between foreign trade and both oil price fluctuations and inflation. Regarding the exchange rate, the results indicated no significant relationship between it and foreign trade. Based on these findings, the study recommends the need to create an environment conducive to exchange rate stability by activating monetary policy tools, working to control inflation rates, and supporting other economic sectors such as industry and agriculture, to reduce excessive dependence on the oil sector and achieve economic development goals.