The Impact of the Electoral Cycle on the Effectiveness of Fiscal and Monetary Policy: A Case Study of Iraq

The electoral cycle influences the orientations of economic decision-makers. In developing countries such as Iraq, political changes are often associated with clear shifts in fiscal and monetary policy priorities. The research aimed to measure and analyze the impact of the electoral cycle on the effectiveness of fiscal and monetary policy in Iraq using the Fully Modified OLS (FMOLS) method. In line with the research hypothesis and objectives, the researchers adopted a descriptive-analytical approach to analyze the relationship between the electoral cycle and the effectiveness of fiscal and monetary policy in Iraq. The research methodology also adopted an inductive approach based on economic measurement, using the KPSS test to assess the impact of the electoral cycle on the effectiveness of fiscal and monetary policy for the period (2004-2023), relying on Eviews for estimation and results extraction. The study reached several conclusions, the most important of which is the existence of a significant negative impact (of the electoral process, pluralism, and political participation) on the percentage of budget collection—a 1-point increase in the electoral process results in a 32% reduction in the budget collection rate. In comparison, a one-point increase in political participation is associated with a 31% reduction in the budget collection rate. This impact is significant at the 5% level. Among the most important recommendations is the establishment of independent economic councils composed of economic experts, free from political influence, to evaluate proposed financial and monetary policies and to work toward the adoption of disciplined financial policies.