The Impact of Public Spending on Unemployment: A Study on the Iraqi Economy for the Period 2004-2021

Abstract

Objectives: The study Objective is to show the effect of public spending on unemployment rates in the economy of Iraq. Basically, the study aims to determine whether the public spending carried out by the government, affects negatively or positively the unemployment rates. Methods: (ARDL) an autoregressive distributed lag model was used. It is based on quarterly time series data for the period 2004-2021. The data were obtained from the Iraqi Central Bank, and the Eviews program was used to find out the impact of public spending on unemployment. Results: The results showed that there is a co-integration correlation of public spending on the unemployment rates in Iraq during the research period. Results also showed a significant and inverse effect of public spending on the unemployment rates during long period. The increase of the public spending rate by 1% leads to a decrease in the unemployment rate by 3%. Conclusions: This study provides enough information for decision-makers regarding public spending that increasing public spending will decrease the unemployment rates, and vice-versa.