Journal of Sustainable Urban & Regional Development Studies (JSURDS)

Abstract Background and Objective: Due to oil price fluctuations, oil exporting countries can be accompanied by income instability and economic growth. This study examines the effect of oil revenue fluctuations on economic growth fluctuations in Iraq and the moderating role of financial development. Accordingly, the main objective of the study is to answer the question of whether financial development can reduce economic growth fluctuations in the context of oil revenue fluctuations.

Methodology: The present study was conducted using the generalized moments method and time series data to examine the effect of oil revenue fluctuations on economic growth fluctuations and the moderating role of financial development. This method allows for the analysis and examination of the dynamics between macroeconomic variables.

Findings and Results: The findings show that fluctuations due to the abundance of oil revenues have a positive and significant effect on economic growth fluctuations. Also, financial development can play an effective moderating role in reducing the fluctuations in economic growth caused by fluctuations in oil revenues. Based on the findings, it can be concluded that further development of the financial system can reduce the negative effects of oil revenue fluctuations on economic growth and financial development can be considered as an effective tool in managing the effects of oil revenue fluctuations on economic growth in Iraq.

Abstract Background and Aim: According to economic literature, excessive inflation (more than the sustainable level of inflation) destroys purchasing power, distorts economic decision-making, and leads to uncertainty in economic factors, while deflation (less than the sustainable level of inflation) can lead to a decrease in spending (consumption) and investment, and potentially stop economic growth. The aim of this research is to use the results obtained from examining the factors affecting the inflation rate in order to increase the efficiency of monetary policy and control inflation.
Methodology: In this study, time series econometric techniques (unit root and stationary concepts, variability models, and autoregression with distributed lags (ARDL) model) have been used. First, the stationary variables are examined by performing classical and nonlinear unit root tests with respect to structural failure. Next, the long-term relationship between the research variables is examined by the bounds test, and then long-term and short-term elasticities are extracted. Exchange rate fluctuations are also extracted by conditional heteroskedasticity models (GARCH) and then these variables will be entered as new explanatory variables in the autoregression with distributed lags (ARDL) model.
Findings and Conclusion: According to the results obtained, the two variables, the exchange rate volatility index and the degree of trade openness, are the most important determinants of the inflation rate in Iraq in the long run. Meanwhile, in the short run, the exchange rate volatility index does not affect the inflation rate. Exchange rate fluctuations can affect trade and investment between affect the international economy, because uncertainty in the exchange rate can stop foreign investment and affect export competitiveness, and also increase import inflation. The increase in the degree of trade openness causes global commodity inflation to quickly affect the Iraqi economy and increase the consumption costs of Iraqi citizens. Also, according to the results, the error correction coefficient is negative and equal to -0/36 Therefore, in each year, 0/36 of the imbalance in the inflation rate in one period is adjusted in the next period. It can be said that the adjustment towards equilibrium is carried out slowly, which depends on the macroeconomic environment of Iraq.