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An Econometric Study of the Impact of Monetary Policy on Foreign Direct Investment in Iraq for the Period (2004-2017)

Sabah Haseeb Hasan, Anwaar Dhiaa AbdulKareem and Assma Abdul Ritha Daghr

International Journal of Economics & Business Administration (IJEBA), 2020, vol. VIII, issue 3, 579-588

Abstract: Purpose: This paper aims to examine the impact of monetary policies on foreign direct investment (FDI) in Iraq during the period (2004-2017). Design/Methodology/Approach: A descriptive and analytical method is used to find conclusions and recommendations that may be useful to those concerned in the field of monetary policy. Findings: The most important results of the study reveal that there is an impact of monetary policies on foreign direct investment in Iraq during the period (2004-2017). The growth rate of money in circulation (as an indicator of monetary policy of the Iraqi central bank) has insignificant impact on FDI in Iraq. The rediscount rate and open market operation (which are instruments of monetary policy) have an insignificant effect on FDI in Iraq and there is a co-integration between the growth rate of money in circulation and FDI. Practical Implications: The study recommends that the Iraqi central bank needs to employ more effective monetary policies that help increase the effect on FDI and its levels. Furthermore, there is a necessity to increase the effectiveness of monetary policy instruments used in the Iraqi economy, in rediscount rate and open market operations in particular. Originality/Value: Based on the findings, we conclude that the monetary policy has affected FDI in Iraq during (2004-2017).

Keywords: Monetary policy; Foreign Direct Investment; unit root test; co-integration; error correction model; model selection. (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Date: 2020
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