Introduction and Objective: Inflation, as one of the most significant economic variables, has profound effects on the economic development process of countries. This study examines the mutual impacts of inflation and aspects of economic development in Iran and Iraq, aiming to analyze the relationships between the inflation rate and various economic variables such as production, agriculture, industry, dependency, education, and health.
Method: This study analyzes the impact of inflation on different dimensions of economic development using long-term data from 1990 to 2024 for both countries. The data were collected from reliable sources such as the World Bank and were evaluated using tests like the Dickey-Fuller test, Johansen cointegration test, and Granger causality test to assess the relationships between the variables. Regression models were also employed to examine the effects of inflation on each dimension of economic development.
Findings: The results indicate that all economic indicators in both countries are stationary, and there are significant relationships between the inflation rate and economic variables. In Iran, an increase in the inflation rate is associated with a slight increase in GDP, but it has considerable negative effects on the agriculture, health, and education sectors. In Iraq, inflation is considered a driver of economic growth, although its negative effects on health and education are also evident.
Conclusion: This research emphasizes that controlling inflation can contribute to improving economic conditions and achieving sustainable development in Iran and Iraq. Furthermore, the findings of this study can serve as a valuable reference for policymakers and economic analysts in formulating effective strategies for inflation management and supporting economic growth. Given the profound impact of inflation fluctuations on human and economic development, further research is necessary to gain a better understanding of these complex relationships.