Analyzing and Measuring the Relation between the Golden Rule of Financial Discipline and the Federal Budget Deficit in Iraq for the Period (2004-2020)

Abstract

This study aims to reduce the deficit in the public budget through the policy of fiscal discipline in Iraq for the period 2004-2020, as the expansionist policy results in an increase in the fiscal deficit in the public budget, which results in the exacerbation of financial burdens and the accumulation of government debts, both on the external or internal level, and if this financial deficit continues, the expansion of government debt will negatively affect the performance of economic activity in general and the management of financial policy in particular; so this research found a relationship between the application of the golden rule of financial discipline and the deficit in the public budget, as the application of this rule works to reduce the deficit in the general budget, and thus achieve financial surpluses in the general budget, and all of this would achieve the objectives of the economic and financial policy that the government seeks to achieve. To achieve this goal, an annual time series was used that extends from 2004 -2020, through the use of a standard model on the statistical program E-views12; the main conclusion reached by the study is the existence of a relationship between the rules of financial discipline and the public budget deficit during the two periods age and depression in Iraq during the study period. The study concluded that the application of the golden rule of financial discipline would correct the course of fiscal policy and then the possibility of employing it to meet the challenges facing fiscal policy in Iraq through rationalizing investment spending, developing infrastructure, and improving education and health.