Impact of The inflationary Gap on the Exchange Rate in Iraq: An Analytical Study

Abstract

   The Iraqi economy suffers from the widening problem of the inflationary gap, whether according to the criterion of surplus money supply or by surplus demand or by monetary stability, which reflects the inability of the productive apparatus in Iraq to contain surplus demand resulting from the injection of additional levels of money into the economy, and according to economic theory the relationship is direct between the inflationary gap according to the three criteria and the exchange rate, as the impact of increasing the inflationary gap will lead to a rise in exchange rates and result in this Depreciation of the local currency.