The Dynamic Effects of Fiscal Policy Shocks on Economic Stability in Iraq for The Period (1990-2021)

A Thesis Submitted to The Council of The College of Administration and Economics –University of Karbala It is Part of The Requirements for Obtaining The Degree of Doctor of Philosophy in Economic Sciences

Submitted By The Student
Mustafa Saad Mehdi Al-Sarhan

Supervisor
Byp.hd.prof. Mehdi Sahr Al-Jubouri              Asst. Prof. Dr. Kazem Saad al-Araji

Abstract:

The dynamic effects of the shock of fiscal policy are one of the most important means that affect the economic stability in most countries، whether developed or developing ، these effects have received the attention of economic academics at the moment because of the change in the political system، the economy has faced many shocks، it is worth noting that the shocks of fiscal policy have many economic and social effects، including high unemployment، low employment، high general prices، economic growth، trade balance and disruption of economic stability، and therefore the study seeks to shed light on the dynamic effects of the shock of fiscal policy on variables The overall fundamentals of the Iraqi economy، especially the stability of the economy، due to the severe positive and negative shocks that the economy has experienced.

In order to measure and analyze the effect of fiscal policy shocks، the (VAR) model was used، and then the transition to the structural model (SVAR) and to calculate and estimate the values of the two transition matrices (S)، which allow us to estimate the functions of the impulse response and the segmentation of variation، after confirming the stability of the (VAR) model through testing the single circuit، which shows that all the roots are located inside the circuit، which means that the model is stable and does not suffer from statistical problems، and then analyzing the functions of the impulse response and analyzing the components of the variation of shocks public revenues and public expenditures on economic growth rates in Iraq.

In light of the results obtained from the research، the diversification of public revenue sources through the development of strategies to exploit revenues in a way that achieves the path of economic growth، reduce inflationary pressures and unemployment and stimulate exports as a strategy of a sound tax and accounting system in order to cope with any shock to the economy، and this requires restructuring the economy through the adoption of more economic، financial and trade reforms in coordination with various sectors and economic policies and to contribute to raising local productive capacities after providing all the requirements required by the reform process.