The Role of Monetary Policy in Achieving Economic Stability in Iraq for the Period ( 2005-2015)

Abstract

The research aims to demonstrate the importance and role of monetary policy and its impact on economic stability with the measurement and analysis of this impact in Iraq for the duration (2005-2015). The research found that there was a direct and moral correlation between the price index and both the cash supply and the gross domestic product (GDP) while inverse and intangible relationship between the price index and the interest rate and the inverse and moral relation of the exchange rate. The results of the econometric analysis showed that the increase displaying cash in one unit with the other factors constant will contribute to increasing the consumer price index by the amount (46.28) alone and to increase gross domestic product (GDP) in one unit, with other factors consistent, will contribute to the increase in the consumer price Index (49.307). Unit, the relationship between the interest rate and the consumer price index, was intangible according to the T test if the SIG value was greater from (0.05), the exchange rate increase by one unit, while other factors are stable, will contribute to a depreciation of the consumer price index by 0.24 0) alone. The research proposals focused on the following:-The monetary policy instruments should be used in parallel with the least risk to monetary stability to serve the objectives of economic stability, And because the Iraqi economy suffers from structural imbalances, this requires the need to activate the role of monetary policy as well as economic policies to achieve economic stability.-There is a need to find an alternative to the policy of pegging the dinar to the dollar, which is now used as a stabilizing factor for monetary policy and a key pillar of banking stability.-There is a need to use the tools of monetary policy in order to achieve monetary stability and to encourage the elements of aggregate demand for goods and services and stimulate the banks in the domestic market to go to the domestic market and support monetary policy in achieving economic stability.