Constructing a Standard Model for Inflation in Iraq and Measuring its Stability for the Period 1971-2013

Abstract

This research aims to construct an econometric model to measure inflation in Iraq and assess its stability over the period from 1971 to 2013. The study focuses on the relationship between money supply as a quantitative indicator and inflation behavior, considering Iraq’s unstable economic conditions including wars, oil price fluctuations, and shifting fiscal policies.Using linear regression analysis via SPSS, along with the Chow test to examine model stability across different time periods, the findings show relative stability during 1971–2003. However, the 2013–2003 period reflects a weakening relationship, indicating a shift in inflation dynamics and model instability in recent years.The study recommends updating economic models used in fiscal and monetary policy, incorporating a broader set of indicators to measure inflation, and enhancing economic stability to ensure more accurate future estimations.