Examining the Impact of Oil Revenue on Inflation Rates in Iraq from 1991 to 2020

The Iraqi economy is primarily dependent on oil exports, which has a substantial impact on the inflation rate and economic stability. Despite substantial studies on the relationship between changes in oil prices and economic activity in both rich and developing countries, studies that specifically investigate the effects of oil prices on different economic sectors, notably in Iraq, remain few. The impact of oil revenues on the inflation rates in the Iraqi economy from 1991 to 2020 is investigated using regression analysis of historical data. To capture both long-term and short-term asymmetric interactions between variables, a nonlinear ARDL method is used. Increases in oil revenues, according to the study, will result in higher inflation rates, while losses in oil revenue will result in lower inflation rates. Understanding the factual connection that exists between the two variables (inflation rates and oil prices) in Iraq is critical, especially for monetary authorities in charge of inflation management. This insight enables them to develop appropriate policies to reduce the inflationary effects of rising oil prices. The study’s conclusions will be useful to policymakers, economists, and stakeholders interested in Iraq’s economic progress and stability.