The Effectiveness of Monetary Policy Tools in Influencing Public Debt in Iraq for the Period (2004-2022)

Abstract

The research aims to explore the effectiveness of monetary policy tools in influencing public debt in Iraq and to measure the relationship between certain monetary policy tools (M2 money supply, parallel exchange rate, and real interest rate) as independent variables and public debt as the dependent variable. This analysis was conducted using the Eviews10 statistical program.  The analytical results of the research confirmed the hypotheses on which the study was based, indicating that monetary policy tools have an inverse effect on public debt in the Iraqi economy during the study period. However, the econometric analysis results revealed:  A positive long-term relationship between money supply (M2) (independent variable) and public debt (dependent variable).  A positive long-term relationship between the exchange rate (independent variable) and public debt (dependent variable).  A positive long-term relationship between the interest rate (independent variable) and public debt (dependent variable).  The research concluded with several recommendations, the most important of which is the need to utilize and activate monetary policy tools by the Central Bank of Iraq to regulate the money supply. This would contribute to price stability and inflation control. Additionally, it emphasized the necessity of improving the effectiveness of monetary policy tools by enhancing the performance of the Central Bank, given its crucial role in achieving economic stability.