The Relationship between Inflation and Money Supply and Exchange Rate in Iraq for the Period (2000-2016)

Abstract

The Iraqi economy suffers from a single source of income represented by oil, despite the increasing research and calls aimed at diversifying sources of income and diversifying the production base, but the Iraqi economy witnessed a decline in the value of the Iraqi dinar against the US dollar, and increases in the supply money, etc. Thus, the problem of research can be posed by the following questions: Is there a relationship between the inflation rate and the money supply and the exchange rate? Is the nature of this relationship positive for both variables or not? Do they have a significant impact on inflation? The aim of the research is to determine the nature of the relationship between the rate of inflation and the supply money and the exchange rate. And to recognize that changes in the money supply and the exchange rate lead to changes in prices of goods and services, which are reflected in changes in inflation rates. The research depends on the deductive approach in terms of analysis and characterization of the variables and the relationship between them, using the quantitative method of multiple linear regression using the statistical program (SPSS 23). The most important conclusions were that both the money supply and the exchange rate have an effect on feeding inflation (implicit reduction) under the conditions of the Iraqi economy of stagnation of the production system and its disruption, and its inability to keep up with consecutive increases in public spending, Total demand on the overall supply and then the emergence of signs of inflation.