Estimating the impact of fiscal policy on unemployment rates in Iraq during the period (2000-2020) using the (ARMA) model

This study researched for the actual reasons behind the exacerbation of the unemployment phenomenon in Iraq and sought to provide solutions and propose the necessary policies to reduce its high rates. The study aimed to measure the impact of financial tools represented in (government expenditure, taxes, and internal public debt) on unemployment rates in Iraq during the period from (2000 - 2020). The study assumed that there were no statistically significant effects of financial variables on unemployment. The study used the (Autoregressive moving average model), and adopted the method of Generalized Least Squares in estimating the parameters, in addition to using several tests, including the unit root test (Augmented Dickey Fuller), as well as the autocorrelation test for error limit (LM-Test) to ensure correct, non-spurious results. Also, annual data collected from several sources were adopted, including the World Bank, the Central Bank of Iraq (CBI), the Iraqi Ministry of Planning and the General Commission for Taxes. The study concluded that there is a statistically significant positive effect of tax revenues on unemployment rates, whereas 1% increase in tax revenue causes an increase of unemployment rates by (5.66) units during the year, as for the other variables represented in (government expenditure and government public debt), they have proven to have a weak effect on unemployment rates, As an increase in government public expenditure by 1% leads to a decrease in unemployment by (-0.30) unit during the year, while the increase in government public debt by 1% causes an increase in unemployment by (0.90) unit during the year. This indicates that the impact of taxes on unemployment rates is greater than the effect of the entire sample, and this indicates the fact that the adopted fiscal policy has caused a continuous increase in unemployment rates, especially after 2014, due to the presence of several problems and crises in addition to internal and external factors that negatively affected the nature of financial decisions, as it pushed the government to rely on government debt and taxation policies as a means of financing its fiscal deficit.