Measuring the Impact of Public Expenditure on the Balance of Payments Using the ARDL Model in Iraq for the Period (2004–2023)

Abstract

Government expenditure is a great reason in economic stability and its impact on the balance of payments is dire. In this light, this paper seeks to use the time series analysis method and the ARDL model to investigate the association between the balance of payments of Iraq and the public spending within the 2004-2023 period. The Eviews 13 software was used to analyse it. The findings show that there is a positive association between spending by the people and balance of payment especially at the short run. The latter findings indicate that the efficiency of government expenditure reform is a necessary tool to accomplish the expansion and close the balance of payments deficit. This study highlights the importance of strategic fiscal policies and government spending in achieving a balanced economy and sustainable growth. Additionally, it emphasizes the need for continuous monitoring and adjustment of public spending to ensure its alignment with national economic objectives. The findings contribute to the understanding of fiscal policy implications in developing economies, especially in the context of Iraq’s economic challenges.