Analyze and measure the relationship between liquidity preference and the rate of inflation in the Iraqi economy ratio for the period (1990-2014)

Abstract

The fundamental relationship between the liquidity preference (the liquidity preference as a percentage of nominal gross domestic output) and the rate of inflation indicated a lot of monetary theories and determined public behavior in keeping the liquidity according liquidity is by to price changes and the level of gross domestic money supply determined by the monetary authorities in the economy, and I disagree Economists often in the causes of inflation and its result with to monetary Quantity (money supply and liquidity preference) and talked a lot of them about the nature of the relationship between monetary Quantity motivational gold assets, starting from David Hume through Irving Fisher and ending Milton Friedman, in the beginning of the last century exchange equation appeared, the nearest to the mathematical formula or matched calculation of monetary theory, are considered exchange equation to Irving Fisher or equation saw the light to the relationship between money and inflation in the form of a mathematical formula procedural then evolved a lot this equation or formula by all economists Peugeot and Alfred Marshall and Keynes and Milton Friedman and others. The study of the relationship between the liquidity preference as a percentage of nominal GDP and the rate of inflation in the Iraqi economy were in with the theoretical and money approach emphasized research on the stability of the effect of inflation on the liquidity preference existence of long-run equilibrium-term relationship between the inflation rate and liquidity preference narrow and broad sense rate , judging from the fact that price changes and generally causes monetary the results of these price changes are in money terms represented the impact of price changes on the preference liquidity ratio through long Syndrome term with some distortion in the short run , it is natural to stay the relationship between the liquidity preference by virtue of its impact rebound toward price changes specific traces on output and employment levels in the economy and the consequent new imbalances in the economy in the short term could lead to new balances in the long run .