Monetary and real consequences of military expenditures in Iraq

Type of the article: Research ArticleAbstractThe purpose of this study is to analyze the effects generated by military spending in Iraq during the pre- and post-ISIS periods, covering the years from 2004 to 2024. The study focuses on the real and monetary implications of military expenditure by identifying the impact and direction of changes in military spending on a set of selected variables. The statistical bulletins of the Central Bank of Iraq and reports of the Iraqi Ministry of Finance were analyzed. Regression analysis and confirmatory factor analysis (CFA) using Amos 22.0 were adopted. All the study hypotheses were assessed, and all relationships were significant, as it became clear that military spending has a positive impact on the monetary base (+0.74), market value of the Iraqi stock market (+0.73), and credit provided to the government (+0.68), meaning that there is a direct relationship. Moreover, the study found a negative impact on the inflation rate (–0.64), number of victims (–0.24), economic growth (–0.26), and assets of commercial banks (–0.47), revealing an inverse relationship between the studied variables and military spending. The central conclusion of the study is that military spending in Iraq, given its growing significance over the past decades and its continued presence in federal government budgets, has become a factor influencing many economic indicators.