Prof .Dr.Safa Al Moussawi
Lecturer.Dr. Salam Kazem
University of Karbala
College of Management and Economics
Department of Economics
The research dealt with the measurement and analysis of the relationship between the development of the internal public debt and economic growth in Iraq for the period 1990-2017. Public debt plays an important role in the stability of the economy. This depends on the size of the debt and the ways in which it can be acted upon. Domestic public debt can be an important stabilizing factor if it is directed towards the areas of boosting production capacity, which is a catalyst for private sector activity.
The research started from the hypothesis that directing the revenues of the public debt to the areas of investment in public projects, especially infrastructures that have an important and complementary effect on the activity of the private sector, will contribute to enhance the productive capacity of the local economy, as well as reduce the impact of competition.
The research was based on the method of analysis, inductive and deductive, through the analysis of the evolution of time series of data used across different stages, and the extrapolation of economic reality and analysis of economic phenomena and development during the research period, and then deduce the implications. In order to clarify the nature of the economic relations between internal public debt and the economic variables used in the research, economic measurement was used as an advanced method of quantitative analysis in this field. The ARDL regression model was used.
One of the main conclusions of the research is that, according to short-term parameters, the increase in GDP leads to a decline in debt, which explains the role of real GDP growth in debt decline. The surplus of the general budget is reflected in the decline in debt. In the long term, it is clear that GDP does not have a significant effect on domestic public debt, as the output depends heavily on crude oil as private sector participation declines. While it is clear that the general budget has a significant long-term effect, which explains the importance of surplus or deficit in the size of the debt.
Keywords: public debt, public budget, economic stability, public debt stability.