MEASURING THE RELATIONSHIP BETWEEN SOME MACROECONOMIC VARIABLES AND TRADE BALANCE IN IRAQ FOR THE PERIOD (2004-2023)

Abstract

This study examines the relationship between Iraq’s trade balance and key macroeconomic indicators (external debt and budget deficit) from 2004 to 2023 using ARDL, error correction, and bounds test models. Results show that in the short  term, GDP positively affects the trade balance, while external debt has a negative impact. In the long term, both GDP and external debt have a positive effect—1% increases in each improve the trade balance by 40% and 3%, respectively. The findings highlight the need to diversify GDP activities and direct external debt toward productive sectors to support sustainable economic growth