Revisiting the Determinants of Inflation in Iraq Utilizing the ARDL Approach

Dr. Hatem Hatef Abdulkadhim Altaee, Dr. Mohamed Khaled Al-Jafari and Sazan Taher Saeed

This study investigates the impact of growth in gross domestic product, an increase in the money supply, imported inflation, and exchange rate on inflation in Iraq. It utilizes the autoregressive distributed lag (ARDL) bounds testing approach for cointegration to explore long and short-run relationship among the variables over the period of 1990-2017. Results reveal that the series are cointegrated in the long-run. In addition, the impact of money supply, imported inflation as well as exchange rate found to be positive and statistically significant. At the same time, growth of gross domestic product turned out to be negative and statistically significant. The study concluded that inflation control requires achieving a proportional level of economic and price activities, where the ratio of money to income grows in a stable manner consistent with financial growth and macroeconomic stability. Accordingly, controlling inflation needs a mixture of fiscal and monetary policies. The findings shed some new insights for policymakers on dealing with inflation in Iraq.

Volume 11 | 09-Special Issue

Pages: 182-188

DOI: 10.5373/JARDCS/V11/20192553