The impact of oil price fluctuations on monetary stability in Iraq for the period (1990-2020)

Abstract

Oil prices and revenues are important in economic activity because the rentier Iraqi economy relies on oil revenues to finance public expenditures and achieve economic and monetary stability. this study investigates the impact of oil price changes on monetary stability in the Iraqi economy from 1990 to 2020. using the co integration methodology and the (FMOLS, DOLS) model, This is achieved to measure the impact of changing oil prices on the exchange rate, interest rate, and inflation rate. The study concluded that changes in oil prices had a negative impact on the exchange rate of the Iraqi dinar and contributed to an increase in inflation rates, but had a positive impact on interest rates; that is, oil prices did not contribute to achieving monetary stability.As a result, economic diversification and the search for new financial resources outside of the oil sector are critical for Iraq to achieve economic and monetary stability.