Examining The Monetary Policy Effectiveness: Money Supply And Inflation In Iraq

Abstract

This study examines the relationship between money supply (M2) and inflation in Iraq, aiming to provide perception and awareness into the effectiveness of monetary policy measures in controlling inflationary pressures. Through applying quantitative methodology, numerical data, and statistical analysis techniques, the study investigates the relationship between money supply dynamics and inflation over the period from 2014 to 2022. Data collected from reliable sources such as the World Bank, Central Bank of Iraq, and Central Statistical Office of Iraq. The analysis reveals a statistically significant and positive relationship between money supply and inflation, with regression results indicating that increases in money supply are associated with higher levels of inflation in Iraq. This finding emphasizes the importance of monetary policy measures in managing inflation and maintaining price stability. Practical implications of the study's findings include implications for monetary policy formulation, inflation targeting frameworks, financial sector development, consideration of external economic conditions, and long-term planning. Overall, the study contributes to the ongoing discussion on monetary policy effectiveness in Iraq and offers valuable recognitions for policymakers, researchers, and stakeholders seeking to promote macroeconomic stability and sustainable growth in the country.