Transmission Channels of the effect of Fiscal Policy on the Iraq Stock Exchange performance for the period 2004-2019

Abstract

This research aims at shedding light on the mechanism of the transmission of the effect of fiscal policy variables (government spending, public revenues, budget deficit) to the financial market as well as studying the effectiveness of these variables on Iraq Stock Index. This can be implemented through a set of influence channels that will clarify the mechanism of interaction between these variables, explain the measurement methods used in the research, and know the performance of the markets based on a sample study of sectors in the Iraq Stock Exchange. According to the study, and by using the results of the multiple linear regression model (semi- log), it was concluded that all the variables included in the study are statistically significant except for the last variable (deficit / surplus) which was statistically insignificant, and that the most influential variable is the fourth variable (tax returns). The study recommended the necessity of relying on fiscal policy variables and guidance in revitalizing the performance of the Iraq Stock Exchange by supporting both aspects of the expenditure, which would help in revitalizing the Iraq Stock Exchange.