Search Results for exchange-rate-policy
Abstract
This research deals with the complex relationship between fiscal policy tools and exchange rate policy in Iraq. Where the exchange rate is one of the important economic indicators that reflect the state of economic stability of the state, and is greatly affected by changes in fiscal policy, especially in light of excessive dependence on oil revenues and fluctuations in global prices, hence the problem of the study stems from the challenges faced by the Iraqi economy due to its great dependence on oil revenues, which leads to fluctuations in the exchange rate The study seeks to answer how different fiscal policy tools affect exchange rate policy. The study found that public revenues, which rely heavily on oil, play a crucial role in stabilizing the exchange rate. Public spending, whether current or investment, also affects the value of the local currency, as the rise in current spending can lead to inflationary pressures, which increases exchange rate fluctuations, and the impact of both the public budget and public debt on exchange rate policy, as it appears that the fiscal deficit and high public debt can lead to Pressure on the local currency. The study emphasizes the importance of economic diversification and increasing non-oil revenues to ensure the stability of the exchange rate.
Abstract
The paper examines the impact of the devaluation of Iraqi dinar in stimulating the gross domestic product, after the devaluation of Iraqi dinar at the end of 2020. In this context, empirical studies and international experiences have been used. Taking into consideration the rentier economy in Iraq and the dependence of the local market on imported goods in order to meet the aggregate demand.
The paper relies on official data and methods of economic analysis. The research problem represented by the weak effectiveness of the previous exchange rate policy in stimulating output and diversifying the Iraqi economy, as well as sacrificing foreign reserves and directing them towards the non-productive commercial sector.
The research concluded that stimulating the GDP through devaluation of Iraqi currency requires the availability of supportive and prudent fiscal and trade policies in the medium and long term. The paper recommends addressing the short-term inflationary effects created by a policy of devaluation of the exchange rate