The size of the legal reserve and the stability of the rate of inflation: the case of Iraq study for the period 2004-2016

Abstract

The legal reserve and inflation are considered macroeconomic variables. Monetary policy uses the Required reserve ratio as a tool to influence the volume of liquidity to be reflected on the general level of prices, Therefore the analysis of the relationship between the two variables is of great importance to demonstrate the ability and success of the Required reserve to contribute to stability of inflation during the period 2004-2016 , The aim of the study was to identify the nature of the relation between the two variables by reviewing the data and using the ARDL model to clarify the effect . The study concluded that there is a long-term effect and inverse response Moving of the Required cash reserve to the rate of inflation