The Impact of government financial policies on Private Sector Consumption and Employment in Iraq

Hashemi Dizaj, Abdulrahim; Hassanzadeh, Mohammad; Sabah, Zaid Ali

The Impact of government financial policies on Private Sector Consumption and Employment in Iraq

Document Type : Origional Article

Authors

Abdulrahim Hashemi dizaj ¹

Mohammad hassanzadeh ²

Zaid Ali Sabah ³

¹ Department of Economics, Faculty of Social Sciences,University OFMohaghegh Ardabili , Ardabil, Iran

² Department of Economics, Faculty of Social Sciences, University OF Mohaghegh Ardabili , Ardabil, Iran

³ Department of Economics, Faculty of Social Sciences,University OF Mohaghegh Ardabili , Ardabil, Iran

Abstract

Background and purpose: Government financial policies are one of the macroeconomic policies to improve or control economic variables, including the level of total consumption and employment. Based on this, the purpose of this research is to investigate the effects of government financial policies, including changes in government expenditures and taxes, on private sector consumption and employment in Iraq in different economic conditions.

Methodology: This research was conducted using vector autoregression model to analyze time series data. This method provides the possibility of examining dynamic relationships between financial policies and macroeconomic variables such as consumption and employment.

Findings and results: The findings show that increasing government spending generally increases private sector consumption, but the effects of taxes are more complex and depend on economic conditions. Also, tax changes have different effects on employment and can be positive or negative depending on the initial employment level and economic conditions. Therefore, the findings show that the government's financial policies act as an effective tool in stimulating or reducing private consumption and employment. Therefore, based on the findings, it can be concluded that in order to improve the effects of financial policies on economic variables in Iraq, there is a need to regulate financial policies in order to reduce their negative effects on macroeconomic variables.

Keywords

Fiscal policies

private consumption

employment

Iraq economy

Subjects

Urban & Regional Economic

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