The impact of conventional monetary policy tools on Private Investment in Iraq for the Period (2005-2023)

Abstract

 The Main objective of this paper is to investigate the impact of conventional monetary policy instruments on private investment in Iraq over the period 2005–2023 using an autoregressive distributed lag (ARDL) model. The results indicate a long-term equilibrium relationship between private investment and monetary policy variables in Iraq. When estimating the parameters, the broad money supply (M2) was the only monetary variable with a significant impact on long-term investment. In the short term, the most effective monetary variables influencing private investment were broad money supply, legal reserve requirements, and the interest rate (policy rate). However, the other monetary variables included in the model had no significant impact on private investment in Iraq, whether in the long or short term. The researcher recommended improving and developing the management of monetary policy instruments to enhance their role in stimulating private investment in Iraq and raising the level of monetary policy in managing the Iraqi banking system. He also recommended giving the banking system a role in international and regional transactions to increase its efficiency in encouraging investment.