The role of coordination between the two fiscal and monetary policies in reducing the phenomenon of poverty – the experiences of selected countries, with special reference to Iraq
Introduction letter
To The Council of the College of Administration and Economics, University of Karbala, Which Is Part of the Requirements for obtaining a master’s degree in economic sciences
by the student
Mortada Ahmed Salman Al-Khafaji
Supervised By
Asst.pro.dr. Huda Zweer Mikhlif Al-Daami
Abstract
The belief by many economists that there is a real economy, which is controlled by the government, and a money economy, which is controlled by the central bank, are separate from each other, This makes the work of both the monetary and financial authorities separate from each other in a way that there is no need for coordination between the two authorities, However, the practical reality proved the opposite, as there is a lot of overlap between the two authorities, Some called it mutual influences, which made the possibility of conflict between them, Especially in developing countries, and the discussion focused later on the relationship between the monetary and financial authorities, Its impact on the phenomenon of poverty.
After that, the modern economy concluded that every action taken by the financial authority has its effects on monetary policy operations, and vice versa, Especially since the monetary and financial authorities have different goals that have led to the emergence of a conflict in the application of monetary and fiscal policies, which disappoints the hopes of both of them in achieving their goals, and that weakness in the position of one of the two policies will reduce the effectiveness of the other policy, which will affect, sooner or later, the achievement of the overall goals of the economy. Among them is the reduction of poverty, and therefore coordination has become necessary.
The research tried to identify the role of fiscal and monetary policies in affecting the phenomenon of poverty in Algeria and Egypt, with the possibility of benefiting from it in Iraq, especially since Algeria and Egypt are economies somewhat similar to the economy of Iraq. The Egyptian economy lived under conditions similar to Iraq’s political, social and economic conditions.
The research reached a number of conclusions, perhaps the most prominent of which is that achieving the economic goals of price stability and growth requires achieving an ideal mix of policies that aim to complement each other. This means creating better coordination between both policies in order to ensure high and sustainable economic growth with price stability, and that the problem of poverty is one of the most complex problems facing decision-makers in Iraq, Despite the adoption of successive governments strategies to address poverty, they did not go towards building or preparing a base for launching, but the funds were distributed directly to some segments, and the large increase in Iraqi public expenditures went towards operating expenditures significantly, and that was at the expense of investment expenditures.
Accordingly, the research recommends the need for coordination between the Central Bank as the body responsible for implementing the objectives of monetary policy and the rest of the government agencies responsible for drawing and implementing financial policy, trade policy, and exchange rate policy within the framework of the general economic policy of the state, And agreeing on economic goals such as the growth rate and inflation rate, determining the time frame for implementation, finding a method to ensure the effectiveness of application and follow-up implementation, working to create a database for individuals who are below the poverty line, reducing the volume of operating expenses in the Iraqi general budget and raising the proportion of investment expenditures in order to expand The operational base and finding job opportunities for the unemployed workforce to reduce the phenomenon of poverty.
