Statement of the Effectiveness of the Exchange Rate in the External Balance

Case Study of the Iraqi Economy for the Period (2002 - 2016)

Authors

  • Thamer Abduil
  • Aaly Kadhum

Abstract

The exchange rate is considered as one of the monetary policy tools that is adopted to guide external and internal economic activities. As Iraq adopts the floating system (nominally proven) and the economy by relying on a single commodity which is oil, it has been revealed by analyzing the variables in the study of the exchange rate of the Iraqi dinar to US dollar is very small and is almost stable, in addition to the inflexibility of Iraq's external trade on both sides exports and imports. It is the external markets that determine the price and the amount of Iraqi oil sold in international markets, also Iraq did not have a productive base that is able to fill even part of the need for domestic demand, forcing the resort to foreign markets to meet the requirements of consumer goods, food and medicine, which are mostly essential and indispensable goods and services that most of them are not available in Iraq, making the economic theory concerned with the exchange rate and external balance cannot be applied in the Iraqi economy.  

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Published

2020-02-03

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Articles