The impact of the exchange rate on economic activity in Iraq

Abstract

The aim of the study is to know the exchange rate and the factors influencing it and to identify the gross domestic product and its types as it is considered the basic criterion in Iraqi economic activity, and the nature of the relationship between the two variables, and through an econometric study that shows the extent of the impact of exchange rates on the gross domestic product, through the use of data obtained It was obtained from the Central Bank of Iraq for the period (2004-2022), using the VAR Vector Auto Regression model, which shows the nature of the bilateral relationship between variables, through the Engle Granger Causallicy test known as the co-integration test, it was considered that there is a positive effect through changing the exchange rate on output GDP in the short term, and there is no positive relationship between the two variables in the long term. The study recommends the need for the government and the Iraqi monetary authority to formulate a stable and fixed exchange rate that contributes to the stability and growth of the Iraqi economy.