Author name:
عبد الجبار هاني عبد الجبار السامرائي
Supervisor name:
علي عبد محمد سعيد الراوي
Abstract:
The subject of monetary policy and financial policy is considered to be one of the most important and revived subjects, according with the revival and change of the economic variables which are reflected in the different economic indicators; which the effects of the two mentioned policies can be analyzed through them, separately or together.Analyzing the effects of the two policies is an overlapping and a considerable matter, because the two policies have overlapping and considerable aims and tools. In addition, they may be affected sometimes by the economic changes and they become - or one of them becomes - a cause of the change in the economic activity, i.e. stand behind the event instead of leading it. This matter requires continuous monitoring, evaluating and adaptation of the aims and tools of the two policies via their middle and final indicators.The subject of monetary policy and financial policy is considered to be very important in different economic systems and economies; whether they were directed with a specific degree or follow the market mechanism in managing their economies with a contrast in the relative importance of one policy comparing with the other one, via the contrast of the economic system and its development degree. Mostly, the directed economies appear in the financial policy; while the monetary policy appears in the economies which follow the market mechanism due to the independence of the monetary authority. Also, the degree of the country economic development and the availability of the financial and monetary abilities have a role in showing which policy is the most effective in achieving the economic aims; whether in overcoming a crisis or a defect, or in achieving a continuous and everlasting development.The subject of monetary policy and financial policy has been discussed; either each policy has been discussed separately or both of them have been discussed together in many researches and studies in the local (in Iraq) and international levels. Many of them were precious researches and studies, and they determined the principals of the two policies work and the intersection and contrast points between them. Most of the studies issued by the International Monetary Fund (IMF) and the Central Bank assured that the problems, related to economy, of the developing countries are due to incorrect monetary and financial policies. They are exaggeratingly expanding, restricting, or contrasting between the functions of the two policies. Also, these studies mostly speak about the typical construction of the tow policies (Optimal Policies). In addition, these studies discuss what the developing countries suffer from, including structural problems in spite of the availability of the financial and monetary abilities, especially in Iraq and Saudi Arabia, in order to achieve great steps in progress, development and promotion. This study is considered to be a contribution which may be helpful in the researches and studies series in analyzing the effects of the two policies together in the economy activity cycle.THE RESEARCH IMPORTANCEThe research discusses the most important problems and aims which most economies work hard to overcome or achieve via the correct launching point, which is depending on real, ambitious and effective monetary and financial policies; according to the problems and defects which the countries of this study suffer from, and the resources, available abilities and the nature of the international status of these countries, and the effects of all these factors in the local economic decision of the countries under study.THE AIM of THE RESEARCHThe research aims to reach and be close to the intersection points in the work of the two policies, by meeting and coordination or by contrasting in order to reach a degree of coordination between the two policies in terms of tools and aims. The monetary policy may tend to be expanded in its tools like the public debts, while the financial policy tends to adjust the monetary supply and control the inflation. Also, complications may differ in their amounts in each policy, i.e. the tax complication of the financial policy may achieve an effect which contrasts with the complication of the monetary policy in spite of tending the two policies to have the same aim and direction. THE PROBLEM of THE RESEARCHTheoretically, there is a contrast problem between the ideological schools, especially the treasury and monetary schools, in adopting the suitable financial policy or monetary policy.While practically, there is a problem of weak coordination between the monetary and financial authorities in adopting the priority of the aims and tools.THE geographical elementThree countries were chosen : Jordan, Saudi Arabia and Iraq; with giving Iraq the priority in the analysis and investigation, especially it witnesses a new trial of following monetary and financial policies based on the market mechanism after (2003). Previously, Iraq followed a central planning system in managing its economy. Jordan and Saudi Arabia were chosen because they represent a geographical, historical and economic propagation of Iraq, because they achieved great steps in the economic correction, which is considered to be a new trial in Iraq. Also, the yielding economy of Saudi Arabia is similar to that of Iraq in many of its components.While Jordan has a limited economic resources and it mainly depends on the external grants and relieves, and its trade with the neighboring countries, especially Iraq. Thus, it forms a tolerable trial in the field of applying the economic reforms comparing with close trials in their economic characteristics.THE ELEMENT of TIMEThe period of (1998 - 2008) was chosen as the programs of economic correction had been appeared in that period obviously in Jordan and Saudi Arabia; and the monetary and financial policies began to take their roles more obviously and effectively in overcoming the temporary crisis in particular, and directing towards the long - terms aims. In Iraq, this stage witnessed great and significant changes. In 1998, the Iraqi economy began to adapt to the economic embargo; and the monetary policy began to play the greatest role in moderating the uncontrolled inflation at that time and indicating that the monetary policy was not very effective due to the subordination of the monetary authority to the financial authority at that time. The period after (2003) witnessed significant changes after occupying the country and eliminating the international sanctions which was imposed since (1991). Iraq pursued towards a new economic philosophy in managing the economic activity, and adapting a free economic system and the market mechanism in managing the economic activity.THE RESEARCH ASSUMPTIONThe research based on the assumption of the independency of the monetary and financial policies in determining the priority of aims and adopting the tools and the middle and final aims. But both of these policies intersect via economic variables which differently affect the economic activity in a contrast way or in a coordinating way. The monetary policy was more effective in treating specific defects in the economies under study, or in stimulating specific economic variables. While the financial policy, was more effective in other variables or in treating specific defects
