Analysis and measurement of double deficit in oil economies   Iraq Case Study (1988-2016)

Authors

  • Mahir O. Ali Department of Economics, Nawroz University, Kurdistan region of Iraq
  • Abduljabar B. Abdulaziz College of Administration and Economics, University of Duhok, Kurdistan region of Iraq

DOI:

https://doi.org/10.25007/ajnu.v8n1a320

Abstract

Interest in the study of the budget deficit (BD) and the deficit of the current account (CAD) (double deficit) in many developed and developing countries alike, so the interest in this study in these deficits due to the continuation of these deficits for long periods in the Iraqi economy. This study aimed to analyze and measure the relationship between the budget deficit and the current account deficit in Iraq and used the annual time series data for the period (1988-2016). The study examined the theoretical basis of the relationship between the two deficits from the perspective of two hypotheses: the Kenzi proposal, which indicates a positive relationship between the two deficits towards the current account deficit, and Ricard equivalence, which denies any relationship between the two deficits. The results of the joint integration test showed a long-term relationship between the two deficits, while the results of the Granger causality test showed a double causal relationship between these two variables. The VEC results indicated the short-term relationship between short-term deficits. The causality of the current account deficit on the budget deficit was more effective than the adverse situation according to the results of the tests. The fiscal policy played a role in increasing the budget deficit as a result of the increase in total expenditure, especially current expenditure, while monetary policy did not play a role in reducing the current account deficit or increasing economic growth. The research presented a set of conclusions and proposals to achieve the stability of the double deficit and increase the growth of the Iraqi economy.

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References

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Published

2019-03-18

How to Cite

Ali, M. O., & Abdulaziz, A. B. (2019). Analysis and measurement of double deficit in oil economies   Iraq Case Study (1988-2016). Academic Journal of Nawroz University, 8(1), 256–274. https://doi.org/10.25007/ajnu.v8n1a320

Issue

Vol. 8 No. 1 (2019)

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Articles

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