Abstract
Oil price fluctuations have a significant impact on the economies of oil countries, as any increase or decrease in oil prices would cause a significant difference in the general structure of the rental economy. In this context, the research aims to measure and analyze the relationship between oil price fluctuations and some variables of Iraq's monetary and fiscal policies during the period (1990-2021) using the nonlinear auto-regressive distributed lag (NARDL) methodology. The research was based on the main hypothesis that monetary and fiscal policy variables (public revenues as a % of GDP, public expenditures as a % of GDP, exchange rate, and inflation rate) respond nonlinearly to fluctuations in oil prices. The research found that there is a long-term equilibrium relationship between oil price fluctuations and each variable. The most affected variables of oil price fluctuations are the exchange rate and the least affected are public expenditures. Oil price fluctuations positively affect public revenues in a non-linear manner, and public expenditures are positively affected by increasing oil prices, and negatively by oil price declines, but they respond linearly to fluctuations in oil prices. Oil price fluctuations also linearly and negatively affect the exchange rate, and have a non-linear effect on the rate of inflation.The linear and non-linear relationships (symmetry and asymmetry) of the effects of oil price fluctuations on the monetary and fiscal policy variables were confirmed by testing the effect of an asymmetric dynamic cumulative multiplier. Causality test results also show that high oil prices cause public expenditures in the long run.
