The impact of the Currency issued by CBI on local investment in Iraq during the period (2004-2019)

Abstract

This research aims to analyze the effect of the currency issued with its two sides (Currency with Commercial Banks and Currency Outside Banks) by the central bank on local investment in Iraq during the period (2004-2019), and is an attempt to analyze monetary correction policies in Iraq and know its effects in attracting domestic investment, when the increase in the money issuance is significant, this may cause inflationary pressures that negatively affect savings and investment, in which case the monetary policy tools represented in the legal reserve, interest rate, and the rate of re-discounting are extremely important in absorbing this excess liquidity. Hence, we can say that the most important variables specified for local investment in Iraq are the cash issue, the legal cash reserve rate, and the rate of re-discounting. As for the impact of the interest rate, it is little because of the nature of the Iraqi economy. The research problem originated from a set of questions, the most important of which: Did the issued currency have an impact on local investment? What is the nature of this effect? Do monetary policy instruments of legal reserve, interest rate, and re-discounting rate matter in absorbing excess liquidity? The research hypothesis is that the issued currency has a slight and opposite effect on local investment in the Iraqi economy. The researchers used a standard model for three monthly time series domestic investment as a dependent variable, and the currency in banks and the currency outside banks as independent variables) from January 2004 to December 2019 By 192 views, to analyze the  issued currency policy  of the Bank of  Central <strong>Iraq and to evaluate that policy through its impact on local investment, researchers have used a error correction model (VECM) for this purpose. The standard model demonstrated that the error correction parameter was both moral and negative, and researchers concluded that (1%) of short-term policies can be corrected  within one time unit (month) to reach equilibrium in the long term.