The effect of money supply on economic stability in selected countries, with particular reference to Iraq

Thesis submitted to the Council of the College of Administration and Economics / University of Karbala as part of the requirements for obtaining a master’s degree in economic sciences

By the student

Haider Sahib Saleh Al-Karawi

Supervised by

Assistant Professor Dr

Kazem Saad Abdul Reda Al-Araji

Abstract

  The research aims to study the effect of money supply on the economic stability of selected countries, with a special reference to Iraq. The money supply is one of the two sides of the monetary balance that forms the demand for money, and the other side is one of the main monetary variables that have been focused on in monetary theory. The study and analysis of the money supply acquires special importance. Whether in the economies of developed or developing countries, because of its importance in directing monetary policy to achieve economic stability, and participation in drawing monetary policy for the long term and determining the rate of growth of the money supply in a manner that is commensurate with indicators of economic stability .

The research aims to analyze the effect of money supply on some indicators of economic stability in the selected countries (UAE, Algeria, Iraq) and to determine the effect of money supply on indicators (Gross Domestic Product, unemployment, inflation, balance of payments) for the period (2003-2020), and the standard model was built according to Annual data using the (Eviews12) program, which is a test for detecting the stability of time series of variables using the extended Dickie-Fowler test. The limits test was also used for the co-integration test based on the autoregressive distributed time decelerator (ARDL) model to measure the short and long-term relationship between variables .

In this research, it was concluded that there is a relationship between the money supply and the gross domestic product of each of the United Arab Emirates, Algeria and Iraq in the short term, and it is a direct relationship. As for inflation, there was a causal relationship between the money supply. As for the balance of payments in the three countries, there is no effect of the money supply on the balance of payments in the short term. Iraqi that was caused by the excessive expansion of the money supply .