An Examination of the Impulse Response Function Under Configuration of the Multiple Autoregressive

In this research, we study the Iraqi economy, considering the exceptional circumstances it went through during the period of the study, represented by wars, economic sanctions, and finally the Coronavirus, which affected all the economies of the world, and the wrong policies generated many problems such as high prices, low exchange rate of the Iraqi dinar, and the deficit Budget, unemployment and others. Therefore, this research focuses on the primary issue facing the Iraqi economy: inflation and its correlation with the exchange rate. This is because the Central Bank, as the monetary authority, uses the exchange rate as a key tool to guide its monetary policies towards stability. We used the autoregressive vector model to analyze data spanning from 1990 to 2021. Where the direction of the causal relationship between the variables under study was determined and measured using the Cranger test for causality, as the exchange rate relationship with inflation and its time repercussions were described. We also used the co-integration test to ascertain the existence of a long-term relationship between the variables under study.