Fiscal Instability and Urban Consumption: How Public Payroll Regimes Drive Municipal Solid Waste Dynamics in Sulaymaniyah Governorate, Iraq (2016–2025)

Abstract Municipal solid waste (MSW) generation reflects household consumption behavior and underlying macroeconomic conditions, yet the environmental and consumption impacts of public payroll disruptions under prolonged fiscal instability remain understudied. This study investigates the dynamic relationship between public sector salary-payment regimes and urban municipal waste generation in Sulaymaniyah Governorate, Iraq, utilizing 120 monthly observations from January 2016 to December 2025. Facing persistent fiscal shocks, administrative salary conditions are conceptualized as discrete economic regimes—ranging from severe disruption and partial payments to deductions and full payment—rather than an arbitrary linear scale. Employing a dynamic econometric regression framework with ARIMA errors (ARIMAX), we model logarithmic waste dynamics while controlling for monthly seasonality, structural trend shifts, and distributed lag effects. The estimated ARIMA (1,0,0) error specification demonstrates optimal fit, revealing significant nonlinear consumption responses to fiscal shocks. Relative to full payment regimes, persistent severe salary disruptions induce a 6.42% contraction in municipal waste generation, while persistent deduction regimes account for a 4.37% reduction, capturing the immediate pullback in household purchasing power. Conversely, partial-payment effects are statistically negligible. Diagnostic evaluations confirm residual normality, stationarity, and parameter stability. Sensitivity analysis further shows that a traditional linear salary index performs substantially worse, reinforcing that public payroll shocks exert nonlinear, regime-dependent effects on urban consumption and waste dynamics. These findings highlight the critical transmission mechanism between public fiscal policy, household expenditure adjustments, and urban environmental outcomes.