The impact of the shock of public revenues on the components of the monetary basis in Iraq for the period 2005-2018

Abstract

The research aims to analyze and measure the impact of the government revenue shock in Iraq on the components of the monetary basis for the Central Bank of Iraq for the period 2004-2019, As well as an analysis of the relationship between public revenues and the monetary basis for the period under study. The hypothesis is changes in government revenues can have a clear impact on the monetary basis components. The Iraqi economy depends on oil revenues to finance what may reach 90% of budget spending. These revenues are linked to international variables, such as global demand, political and security conditions, and competition between producing countries. The results of the joint integration model showed that there is a relationship between government revenues and the monetary basis, which confirms that there is an impact of government revenues on the monetary basis in Iraq. The government should work to increase its types of income because this will reduce the dependency of the monetary basis on public revenues and increase the ability of the central bank to control the money supply.