Using the ARDL Model to Diagnose the Impact of Foreign Reserves on Iraq Foreign Investment
DOI:
https://doi.org/10.51699/ijbde.v4i1.228Keywords:
Foreign Reserves, Foreign Direct Investment, ARDL, Iraqi Investment, Correlation, AutoregressiveAbstract
This study investigates the relationship between Iraq's foreign reserves and direct investment from 2004 to 2023, using the Autoregressive Distributed Lag (ARDL) model. While prior research has highlighted the role of oil in Iraq's economy, there remains limited understanding of how foreign reserves and investment interact over time. This study aims to fill this gap by analyzing both short-term and long-term correlations between these variables. The findings reveal a complementary relationship between foreign reserves and direct investment, with oil prices playing a crucial role. Specifically, higher oil prices lead to increased state revenues, which, in turn, boost foreign reserves. These results underscore the importance of oil investments in strengthening Iraq's financial stability and offer policy implications for managing reserves and fostering sustainable economic growth.
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