Measuring the Impact of the Financial Policy Efficiency on the Iraqi Gross Domestic Product (GDP) from 2004 – 2024

Abstract

The aim of this research is to measure the impact of financial policy effeciency on GDP in Iraq over the period (2004-2024), in light of the economic and political changes that Iraq witnessed after 2003, which directly impacted public finance performance, particularly in terms of public spending and public revenues. The research employes a quantitative approach by analyzing annual time series using standard models (OLS) model to measure the relationship between financial policy instruments (public spending, public revenues, fiscal deficit or surplus) and real GDP.

The results reveal a long-term relationship between financial policy variables and GDP. Public spending, particularly investment spending, has a positive and significant impact on GDP, while heavy reliance on oil revenues has contributed to making financial policy less effective during periods of oil price fluctuations. The research also demonstrates weak diversification of public revenues, reflecting the vulnerability of financial policy to external shocks. The researcher recommends the adoption of structural reforms in financial policy aimed at improving the efficiency of public spending and diversifying sources of revenue, thus contributing to achieving sustainable economic growth and reducing dependence on the oil sector.