The Role of Fiscal and Monetary Policies in Achieving Inclusive Growth -Selected Countries’ Experiences with A Special Reference to Iraq

A Thesis Submitted to

The Council of the College of Administration and Economics – University of Karbala

In partial fulfilment of the requirements for the Degree of Master of Science in

Economics

by 

Huthayfa Hussein Muhi Al-Tahmazi

Supervised by 

Prof. Dr. Salam Kazem Shani Al-Fatlawi

 The research deals with the role of fiscal and monetary policies in achieving inclusive growth, the experiences of selected countries with reference to Iraq. The relationship between the role of fiscal and monetary policies towards economic openness and the promotion of economic growth.

      The research stems from the hypothesis that the fiscal and monetary policies in contemporary developmental thought have a fundamental role in supporting and developing inclusive growth indicators as a modern approach to economic growth. This relationship can be studied within the framework of the available economic literature and a sample of the experiences of selected countries – with special reference to Iraq. The problem of the research was whether the fiscal and monetary policies are able to achieve comprehensive growth in Iraq and address the imbalances in the Iraqi economy. The importance of the research is represented by the cognitive need to study the role of fiscal and monetary policies in achieving comprehensive growth, the experiences of selected countries with a reference to Iraq, through specialized economic literature to crystallize the theoretical basis for studying the experiences of the selected sample countries with a special reference to Iraq, to find out the theoretical and experimental results that can be based on. To provide a scientific understanding of the studied relationship to contribute to the development of specialized economic literature and the development of scientific, analytical and experimental methods for researchers, and to provide the knowledge and scientific basis for decision makers in the countries of the selected sample.

       The research is based  on the integrated deductive  and inductive approach, in studying and analyzing the available economic literature to find out the theoretical basis, and using the descriptive method in analyzing the relevant economic facts with the use of the statistical method to analyze the path of the relationship between the variables studied and then using the advanced economic measurement. To measure the role of fiscal and monetary policies in achieving inclusive growth by using the autoregressive model of distributed slowdowns (ARDL) to determine which of the two policies is more appropriate and appropriate to rely on in inclusive growth. The presentation of the theoretical and practical framework for fiscal and monetary policies and their role in achieving inclusive growth, gives a clear picture of the reality of fiscal and monetary policy in the shadow of the economic literature. And the statistical analysis of the evolution of the relationship between the variables used, and the most important conclusions reached

      The researcher found that oil revenues (TO) according to the short-term parameters have a significant impact on output, and this explains the positive impact of oil revenues on the rest of the other economic sectors, and tax revenues (TR) have a significant positive impact on output and as one of the fiscal policy tools that contribute to stimulating output This is done by targeting certain activities and exempting others.It is also clear that investment expenditures (IE) according to the long-term parameters have a significant negative impact on the formation of fixed capital, and this means that an increase in investment expenditures may lead to a slight decrease in the formation of fixed capital and can be justified This is because investment spending is not often directed towards areas that can increase the formation of fixed capital, and it was also concluded that current expenditures (CE) according to the long-term parameters have a significant positive effect on the formation of fixed capital, and this implies an increase in employment rates government, which needs to expand fixed capital in the economy.The researcher also concluded that money supply in the broad sense (M2) according to long-term parameters has a significant impact on the formation of fixed capital, just as both private and public credit have no significant impact on capital formation. Fixed in the long term, and this means that monetary policy is not effective in the Iraqi economy in the long term.

The Role of Fiscal and Monetary Policies in Achieving Inclusive Growth -Selected Countries’ Experiences with A Special Reference to Iraq

A Thesis Submitted to

The Council of the College of Administration and Economics – University of Karbala

In partial fulfilment of the requirements for the Degree of Master of Science in

Economics

by 

Huthayfa Hussein Muhi Al-Tahmazi

Supervised by 

Prof. Dr. Salam Kazem Shani Al-Fatlawi

 The research deals with the role of fiscal and monetary policies in achieving inclusive growth, the experiences of selected countries with reference to Iraq. The relationship between the role of fiscal and monetary policies towards economic openness and the promotion of economic growth.

      The research stems from the hypothesis that the fiscal and monetary policies in contemporary developmental thought have a fundamental role in supporting and developing inclusive growth indicators as a modern approach to economic growth. This relationship can be studied within the framework of the available economic literature and a sample of the experiences of selected countries – with special reference to Iraq. The problem of the research was whether the fiscal and monetary policies are able to achieve comprehensive growth in Iraq and address the imbalances in the Iraqi economy. The importance of the research is represented by the cognitive need to study the role of fiscal and monetary policies in achieving comprehensive growth, the experiences of selected countries with a reference to Iraq, through specialized economic literature to crystallize the theoretical basis for studying the experiences of the selected sample countries with a special reference to Iraq, to find out the theoretical and experimental results that can be based on. To provide a scientific understanding of the studied relationship to contribute to the development of specialized economic literature and the development of scientific, analytical and experimental methods for researchers, and to provide the knowledge and scientific basis for decision makers in the countries of the selected sample.

       The research is based  on the integrated deductive  and inductive approach, in studying and analyzing the available economic literature to find out the theoretical basis, and using the descriptive method in analyzing the relevant economic facts with the use of the statistical method to analyze the path of the relationship between the variables studied and then using the advanced economic measurement. To measure the role of fiscal and monetary policies in achieving inclusive growth by using the autoregressive model of distributed slowdowns (ARDL) to determine which of the two policies is more appropriate and appropriate to rely on in inclusive growth. The presentation of the theoretical and practical framework for fiscal and monetary policies and their role in achieving inclusive growth, gives a clear picture of the reality of fiscal and monetary policy in the shadow of the economic literature. And the statistical analysis of the evolution of the relationship between the variables used, and the most important conclusions reached

      The researcher found that oil revenues (TO) according to the short-term parameters have a significant impact on output, and this explains the positive impact of oil revenues on the rest of the other economic sectors, and tax revenues (TR) have a significant positive impact on output and as one of the fiscal policy tools that contribute to stimulating output This is done by targeting certain activities and exempting others.It is also clear that investment expenditures (IE) according to the long-term parameters have a significant negative impact on the formation of fixed capital, and this means that an increase in investment expenditures may lead to a slight decrease in the formation of fixed capital and can be justified This is because investment spending is not often directed towards areas that can increase the formation of fixed capital, and it was also concluded that current expenditures (CE) according to the long-term parameters have a significant positive effect on the formation of fixed capital, and this implies an increase in employment rates government, which needs to expand fixed capital in the economy.The researcher also concluded that money supply in the broad sense (M2) according to long-term parameters has a significant impact on the formation of fixed capital, just as both private and public credit have no significant impact on capital formation. Fixed in the long term, and this means that monetary policy is not effective in the Iraqi economy in the long term.