Estimating the Impact of Monetary Stability and Commercial Exposure on the Agricultural Sector’s Production of Vegetable Oils in Iraq for the Period 2003-2020

Abstract

This manuscript aims to estimate the impact of monetary stability and commercial exposure on the agricultural sector's production of vegetable oils in Iraq for the period 2003-2020. We assume that monetary stability and commercial exposure impact the quantity of vegetable oil production. Use descriptive analytical approach and use econometric techniques estimate the impact utilizing unit root testing with the extended Dickey-Fuller (ADF) time series test. The variables became stationary after taking their first difference. According to Johansen, co-integration was observed when co-integration was tested as the vector error correction model (VECM) was applied. There is a long-term equilibrium relationship between the independent monetary stability variable (X1), the independent trade exposure variable (X2), and the dependent variable of the quantity of vegetable oil production (Q). That is, there is a long-term equilibrium relationship that goes from (X1) and (X2) to (Q). The results indicate that there is a significant positive relationship (positive effect) between monetary stability (X1) and the agricultural production of vegetable oils (Q) in the long term. There is an inverse significant relationship (reverse effect) of commercial exposure (X2) on agricultural production of vegetable oils (Q) in the long term. The quality of the model's performance and its safety from standard problems were confirmed. The manuscript recommends that the government of Iraq get up prioritize supporting the vegetable oils sector by developing a strategy that works to increase production and includes providing financial and in-kind support and preparing infrastructure for the agricultural sector to reflect the increase in the production of vegetable oils because they are considered a cash crop and essential for achieving food security.