Analysis of the relationship between oil revenues and money supply in Iraq for the period 1990 – 2019
Keywords:Oil revenues, Money supply, ARDL, Iraq economy
The study aims to analyze the relationship between oil revenues and money supply in Iraq and to show the extent of the money supply influenced by the fluctuations that occurred in oil revenues.
It has been used time-series data regarding the oil revenues and money supply during the period 1990-2019. The study depends on the econometrics analytical method to reach the objectives.
The study concluded that there is a direct relationship between the independent variable (REV) and the dependent variable (M), as a result of an increase in the value of the variable (REV) by (1%) leads to an increase in the value of the variable (M) by approximately )4.1(%, This result is consistent with the economic theory and previous expectations of the study. Moreover, the study found that there is a co-integration between oil revenues and money supply, and the trend towards its equilibrium level in the long-term can be determined for a period mor than a year.
Finally, the study presented several recommendations, including; Adopting an appropriate monetary policy to reduce the new monetary issuance and regulate the money supply of Iraq in line with the real production volume of the various economic sectors. In addition, it is necessary to develop the oil industry (production, refining, transportation...etc) to reduce costs as well as establish petrochemical factories to obtain extra revenue rather than selling crude oil directly at lower prices in the global markets.