the use of Granger Causality in analyzing the relationship between investment expenditures and Gross fixed Capital "formation in Iraq for the period(1980-2016)"

Abstract

The goal of this research is to test of the causal relationship between investment expenditures and total fixed capital formation in Iraq for the period (1980-2016). Unit root is applied test to test the stability of data and to verify the existence of a long-term relationship between the two variables using the Johansson test (Granger Causality Test) to determine the direction of the causal relationship between the two variables and to analyze the nature of these variables using the Vector Auto regression model. In order to achieve the research objectives, the research included two sides: The first includes the theoretical framework of the concepts of investment expenditure and Gross fixed capital formation the second deals with the theoretical framework of the econometric model and the analysis and measurement of the causal relationship between the variables used. The results showed that there is a long-term relation and one-way equilibrium between investment spending and(GFCF). This is consistent with economic theory and is consistent with research phenomena.