ANALYSING THE RELATIONSHIP BETWEEN THE MONETARY MULTIPLIER AND ITS COMPONENTS IN THE IRAQI ECONOMY

Abstract

The money multiplier is the center of monetary policy because it acts as the transmission mechanism of the alterations in the money supply that in turn affect interest rates and other real economic variables and the central bank's control over the monetary base, or high-powered money. The money multiplier is thus crucial for monetary policymakers because it offers an understanding of the factors responsible for changes in the money supply. Through the money multiplier, policymakers can reduce such fluctuations by manipulating the monetary base. The purpose of the current study is to value the economic relevance of the connection among the money multiplier and its variables in the Iraqi economy case. The research includes extra indicators by employing the ARDL model with monthly data during the period 2015-2024. The study concludes that the money multiplier and the variables in the money multiplier continue to keep the long-run equlibirium relation among them. The study also finds the most economic and statistical important determinant of the long-run level of the money multiplier is the time deposit/demand deposit ratio.