The relationship between financial instruments and the volume of imports in Iraq using a model(ARDL)*

Abstract

This research aims to explore the relationship between financial policy tools and the volume of imports, and to determine how financial policies can affect trade exchange and demand for imported goods. The problem of the research lies in answering the following question: what is the nature of the relationship between financial policy tools and the volume of imports in Iraq during the research period? The research is based on the hypothesis that financial policy tools have a positive effect on the volume of imports in Iraq for the period (2004-2022). Meanwhile, the results of the econometric analysis using the Autoregressive Distributed Lag (ARDL) model in estimating the relationship between the variables in the short and long term revealed that the estimated parameters in the short term showed a reverse and direct effect between (public spending and external debt) and imports, while other variables (public revenues and internal debt) had a positive effect on imports. In the long term, the estimated parameters indicated a positive effect from (public spending and external debt) to imports, while there was a reverse effect from (public revenues and internal debt) to imports. The research concluded with a set of findings, the most important of which is that there is a positive relationship between financial policy tools and the volume of imports, where expansionary financial policies lead to an increase in imports. The research recommended that it is important to conduct periodic studies to monitor the impact of financial policy on the volume of imports and to adjust policies as needed.