The effectiveness of monetary policy tools in promoting sustainable growth in the Iraqi economy

Abstract

Any sustainable growth strategy for an economy must include monetary policy instruments because of the profound influence they have on long-term economic viability. Under the assumption of a statistically significant relationship between monetary policy instruments and sustainable growth indicators in the Iraqi economy, this study aims to assess the efficacy of quantitative monetary policy instruments in stimulating sustainable growth processes and increasing economic growth rates from 2005 to 2023. The research problem is summarized as the tools of monetary policy not playing a strong enough role to positively impact sustainable growth. Open market policy, GDP index, and per capita GDP index all have long-term equilibrium relationships, according to ARDL's findings. Assuming all other variables remain unchanged, the change in quantitative tools can account for 64% of the variation in the GDP. Assuming all other variables stay the same, the findings also prove that the cash reserve index, GDP indicators, and the per capita GDP index have an inverse connection in the long run. In order to make the quantitative tools of monetary policy—such as monetary reserve policy and open market operations—more effective, we suggest that the monetary and financial markets be stimulated and activated