The effects of foreign exchange rate shocks on some macroeconomic variables in Iraq for the period (2004-2021)

Abstract

The research aims to measure and analyze the impact of foreign exchange rate shocks on some variables of the overall Iraqi economy during the period (2004-2021), as these shocks have different effects on the macroeconomic variables represented by: gross domestic product, consumer price index, public expenditures, public revenues, and imports. Foreign exchange rates are also linked to the chosen policy of the Central Bank of Iraq in managing the foreign exchange market and to the rentier nature of the Iraqi economy. The research will depend on the quantitative method in estimating the levels of impact of foreign exchange rate shocks on some macroeconomic variables in Iraq, and during the selected study period. The research concludes that any change in foreign exchange rates in Iraq (assuming other factors remain constant) affects the decline in GDP growth by -3.2%, the rise in consumer price indices by 1.8%, and public expenditures will increase by 2.7%. Public revenues will increase by 2.4%, while imports will decrease by -1.9%.