Measuring and Analyzing the Reality of Fiscal Policy Tools to Curb Drug Trade and Their Impact on the Social Dimension of the Iraqi Economy

Abstract

The aim of this research is to examine the impact of fiscal policy through its tools (public revenues and public expenditures) on the social dimension, specifically focusing on (unemployment and poverty), in the context of combating the financing of drug trade in the Iraqi economy. The study uses quarterly data for the period (2004-2023) and employs the Autoregressive Distributed Lag (ARDL) model. The results show an inverse relationship between fiscal policy tools (public revenues and public expenditures) and unemployment. Additionally, the relationship between public expenditures and poverty was also inverse. These relationships hold for both the short and long term and align with economic theory. Furthermore, the relationship between public revenues and poverty was inverse in the short term and positive in the long term. The study recommends supporting small and medium-sized enterprises to reduce poverty, which is a key factor in combating the spread of drugs, as well as increasing investment in productive sectors to reduce reliance on illegal activities.