A Thesis Submitted By
Harith R. Attieh AL- zurfi

To The Council of Management and Economic College University of Karbala As Partial Fulfillment of the Requirements For The Degree of Master of Science in Economics

Supervisor By
Asst. Prof. Dr. Mahdi S. Gailan Al-Jebouri

Abstract:-
The deficit phenomenon is one of the main problems in the financial policies of most countries of the world, especially Iraq. The Iraqi economy has suffered from budget deficit due to several reasons, including the imbalance of public expenditure of the state. Current expenditures constitute the bulk of public expenditure. As well as the imbalance of the structure of public revenues of the state and dependence on a large source of a limited monies to obtain a large part of the general revenue, the crude oil sector, compared to the weakness of the contribution of other sectors, which makes the Iraqi economy vulnerable
to external shocks, The security situation and the political, which quickly Matather negatively in the general state budget.
This study is based on the hypothesis that exchange rate
flexibility can contribute to the financing of the general budget as well as the non-effectiveness of customs taxes.
In order to test this hypothesis, the study was divided into three
chapters. The first dealt with the theoretical framework of the deficit of the general budget, customs taxes and the second exchange rate. The analysis dealt with the reality of the Iraqi economy. The third dealt with the measurement and analysis of the relationship between the general budget deficit, customs taxes and exchange rate. On the results of the standard models using the ARDL model, which is one of the advanced
standard methods. This model depends on the time series stability test and gives results on the nature of the relationship in the short term (error correction model) Results for the long term. The study reached a number of conclusions, the most important of which was the existence of a long- term equilibrium relationship as well as the short-term relationship

between the variables of the study. The rate of adjustment of the deficit function (0,26) was the custom tax function and the exchange rate function respectively (-0.81, -0.38) Then the imbalances that can occur will be corrected in part in the same year and their return to the long-term equilibrium value.