THE IMPACT OF TIGHTENING GLOBAL MONETARY POLICIES ON THE MACROECONOMIC STABILITY OF THE IRAQI ECONOMY

Authors

  • Mamdooh Attallah Faihan College of Administration and Economics, University of Anbar
  • Jawad Shakir Frayyeh College of Administration and Economics, University of Anbar
  • Mohammed Jumaah Raheem College of Financial and Administrative Sciences, University of Al Maarif, Iraq
  • Sebyan Tareq Saeed Al-Aaraji College of Administration and Economics, University of Anbar
  • Wisam Al‑Anezi Department of Economics, College of Administration and Economics, University of Anbar
  • Ahmad Hussein Battal Department of Economics University of Anbar, College of Administration and Economics Anbar, Iraq

Keywords:

Monetary Policies Tightening, Local Projection, Iraq.

Abstract

This paper examines and measures the impact of a monetary policy shock in the developed world on selected macroeconomic variables using the local projection approach. It discusses more recent tightenings in the U.S. and the E.U. and uses data from the World Bank and policy interest rates from the E.C.B. and the F.E.F. The findings reveal that the indirect impact of tighter monetary policy on Iraq's Gross Domestic Product (GDP) growth, export-to-GDP ratio, import-to-GDP ratio, foreign direct investment (FDI)-to-GDP ratio, foreign assets-to-GDP ratio and parallel exchange rate is carried through oil price and import transmission channels. The results support the traditional notion that contractionary policy in advanced countries can have spillover effects on each other and advanced economies, generally influencing the economies of both groups through slower growth, currency devaluation and more restrictive fiscal policies, including in Iraq.

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Published

2026-06-18

Issue

Vol. 18 No. 2 (2026): International Journal of Economics and Financial Studies

Section

Original Article