The Impact of Global Oil Price Fluctuations on Economic Growth in Iraq by using VAR Model

Abstract

In this research economic growth is one of the concepts that developed and developing countries alike have been taken into account. This research touched on the most important components of the Iraqi oil sector. The role of this sector and the extent of its contribution to the gross domestic product, which is denominated in US dollars according to a base year 2010. Therefore, it became necessary to clarify the concept of economic growth. Thus, it became necessary for Iraq to maximize the rates of economic growth, which was closely linked to the oil sector, which has become the only sector that feeds the rest of the sectors. The researcher adopted a set of standard formulas to demonstrate the impact of oil price fluctuations on Iraqi economic growth, and concluded that: Vector Auto Regression model (VAR) is the model adopted for the data of the variables of the Iraqi economy. After conducting an estimation, it was discovered that the linear formula produced the best results and had the highest value for the determination coefficient, and that the Cranger causality test revealed the existence of a statistically significant reciprocal relationship between the variables considered for the period 1970-2015.