Measuring the impact of oil shocks on the gross domestic product and its development impact in iraq
- Post by: Muthanna mjdes
- July 1, 2024
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Abstract
The fluctuations in oil prices and the emergence of the oil shock created burdens on the economic development process through its impact on the gross domestic product. The planning process becomes difficult for government policies, which generates confusion in formulating development policies. The Iraqi economy depends mainly on oil imports, which affected the global crises and shocks and made the government’s mission in implementing the reform program face challenges and obstacles represented in financing investment projects. This research aims to neutralize the impact of oil price fluctuation shocks on the level of Iraqi economic performance and to demonstrate the adverse impact these shocks cause through their effects on the gross domestic product. Also, this work focuses on analyzing the impact of oil shocks on the gross domestic product using the ARDL distributed time lag model. The research reached an analysis of the response and an estimate of the indirect impact of oil shocks on the gross domestic product, as the effect was positive, which reflects the Iraqi economy’s dependence on oil at a rate of more than 95% of external stocks of foreign currency. It reaches a rate of up to 60% of the domestic product in Iraq. Finally, the research recommends reducing reliance on oil revenues as they represent a permanent source of shocks due to their connection to oil prices, which represents an external variable susceptible to fluctuations in market prices, and moving to rely on other alternative sources of activating other sectors to achieve development.
Muthanna Journal of Administrative and Economic Sciences, 2024,Volume 14, Issue 2, Pages 88-98
DOI:10.52113/6/2024-14-2/88-98
