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Optimal Monetary Policy for Postwar Iraq

Author

Listed:
  • Bedri Kamil Onur Tas

    (TOBB ETU Department of Economics)

  • Selahattin Togay

Abstract

This paper theoretically investigates the optimal monetary policy regime for post-war Iraq. We analyze the macroeconomic dynamics (inflation, output and exchange rate) and the credibility and reputation of the Central Bank of Iraq (CBI) under alternative monetary policy regimes. We construct a detailed and realistic model that can be used to analyze the macroeconomic structure and expectation dynamics of an oil-producing, open economy. The simulation results indicate that an independent central bank with inflation targeting achieves credibility and reputation. The model constructed in this paper can be used to investigate more oil producing open countries.

Suggested Citation

  • Bedri Kamil Onur Tas & Selahattin Togay, 2009. "Optimal Monetary Policy for Postwar Iraq," Working Papers 488, Economic Research Forum, revised May 2009.
    • Handle: RePEc:erg:wpaper:488
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