Implementation of the aggregate general equilibrium model to monetary policy in the iraqi economy for the period (2004-2020)

Authors

  • Saif R. Mohi College of Administration and Economic, Baghdad university, Baghdad, Iraq
  • Mahmood M. Daghir College of Administration and Economic, Baghdad university, Baghdad, Iraq
  • Lorance Y. Salih College of Administration and Economic, Baghdad university, Baghdad, Iraq

DOI:

https://doi.org/10.56967/ejfb202282

Keywords:

Monetary policy transmission (MPT), DSGE Model, Smetes and wouters Model, Economic shocks

Abstract

This paper examined the channels by which the effect of monetary policy is transmitted to macroeconomics in Iraq using one of the dynamic random general equilibrium models (DSGE, smets and wouters 2007). The study shows a general equilibrium model and analyzes precisely the channels of impact transmission and their effects, via a range of instruments used by the monetary authority through the mechanism of transmission of the effect of Iraqi monetary policy to some macroeconomic variables. This is illustrated by inflation targeting through the nominal fixed (exchange rate) through the foreign currency sale window , and the reason for using the exchange rate as a nominal constant is due to the financial shallowness suffered by the Iraqi economy and the separation of monetary behavior from the real behavior in the economy, as well as the absence of focus on a direction to the potential output (the level of natural unemployment rate), which led to the weakness of the impact of the Iraqi central tools in macroeconomic variables without monetary variables, and the research reached the effectiveness of the exchange rate channel without other channels to transmit the impact of monetary policy to the macroeconomic variables in Iraq, and this is what made the monetary authority stick to a policy The window of selling foreign currency for its ability to control liquidity levels and sterilize the economy from the undisciplined economic policies of the macroeconomic management partners in Iraq.            

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Published

2022-04-03

How to Cite

Nasser س., Daghir م., & Salih ل. (2022). Implementation of the aggregate general equilibrium model to monetary policy in the iraqi economy for the period (2004-2020). Entrepreneurship Journal for Finance and Business, 3(2), 253–275. https://doi.org/10.56967/ejfb202282

Issue

Section

Research articles

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