Analyzing Relation Between Inflation and Macroeconomic Variables

Inflation has been distorting Iraqi economy progress; moreover; it makes Iraqi economy not stabilized for decades this study examines the relationships among inflation and macroeconomic variables. The study was based primarily on the central bank of Iraq annually bulletin data for the variables (GDP, M1, and IR). Furthermore, workforce data has been extracted from UNCTAD statistical data. ARDL co-integration approach has being used to find a correlation, co-integration, and long run relationships among variables. The findings of this work have being reflected the status of co-integration and correlation, as well as the nature of relationships. It found that GDP and CPI have co-integration and long run relationship. Also, there is a correlation between the two variables. Furthermore, the strong co-integration and long run relationship has being found between CPI and M1, the positive correlation has characterized the relationship between WF and CPI. Moreover, there is co-integration and long relationship between them. The increase in CPI rate can be reasoned to the increased in WF. However, there is no co-integration and long run relationship between IR and CPI.