Forecasting Iraq’s Broad Money Supply for 2026–2030: Evidence from Box–Jenkins Models and Monetary Policy Implications

Article DOI: https://doi.org/10.57017/jaes.v21.4(94).04

Author(s):

Ehsan Jabr ASHOOR Department of Economics, College of Administration and Economics, University of Baghdad, Iraq
Burhan Othman HUSSEIN Department of Economics, College of Administration and Economics, University of Kirkuk, Iraq
Omar Mahmood AKAWEE Department of Economics, College of Administration and Economics, University of Diyala, Iraq

Abstract:

This study forecasts Iraq’s monthly broad money supply (M2) from February 2026 to December 2030 using 265 observations covering January 2004–January 2026. M2 is modelled as an observed monetary aggregate rather than a structural money-demand function. Unit-root. stationarity diagnostics indicate non-stationarity in levels. support one ordinary difference: the Phillips–Perron Z(α) test strongly rejects the unit-root null after differencing (−226.863. p < 0.01). while KPSS does not reject stationarity (0.153. p > 0.10); ADF evidence is specification-sensitive. Monthly effects remain relevant, although OCSB indicates that seasonal differencing is unnecessary (D = 0). A transparent ARIMA/SARIMA candidate set is evaluated using AIC/BIC, residual diagnostics, a 37-month holdout, expanding-window one-step forecasts, and simple benchmarks. SARIMA(0,1,1)(0,0,1)₁₂ without drift is retained because it combines significant MA parameters, acceptable Ljung–Box diagnostics. the lowest fixed-holdout RMSE among diagnostically adequate parsimonious candidates (4,279.3 billion dinars) and the best expanding-window RMSE (2,043.4 billion dinars). slightly better than the random-walk benchmark (2,121.5).

The central forecast remains near 169.3 trillion dinars. while uncertainty widens substantially; the December 2030 95% interval is approximately 134.5–204.2 trillion dinars. BDS rejects i.i.d. residuals, so the forecast is interpreted as a conditional linear baseline for liquidity monitoring, requiring uncertainty-aware apply and frequent re-estimation.

Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

Article’s History: Received 9th of June, 2026; Revised 29th of July, 2026; Accepted 31st of August, 2026; Available online: 30th of September, 2026. Published as research article in the Volume XXI, Fall, Issue 4(94), 2026.

How to cite:

Ashoor, E. J., Hussein, B. O., & Akawee, O. M. (2026). Forecasting Iraq’s Broad Money Supply for 2026–2030: Evidence from Box–Jenkins Models and Monetary Policy Implications. Journal of Applied Economic Sciences, Volume XXI, Fall, 4(94), 1154 - 1170. https://doi.org/10.57017/jaes.v21.4(94).04

CRediT Authorship Contribution Statement⁠: Ashoor, E. J.: Conceptualization, Methodology, Formal analysis, Writing – original draft. Hussein, B. O.: Validation, Investigation, Writing – review & editing. Akawee, O. M.: Data curation, Software, Visualization, Validation, Writing – review & editing. All authors reviewed and approved the final manuscript.⁠

Acknowledgments / Funding: The authors report no external funding for this study and no additional acknowledgments.⁠

Conflict of Interest Statement⁠: The authors declare no commercial or financial relationships that could be construed as a potential conflict of interest.

Data Availability Statement: The monthly broad money supply (M2) series used in this study was obtained from the Central Bank of Iraq (CBI), Statistics and Research Department, Monthly Statistical Bulletin (النشرة الإحصائية الشهرية), official source page: https://cbi.iq/page/122. At the time of access, that page linked the official downloadable Excel workbook at https://cbi.iq/static/uploads/up/file-178962848411389.xlsx. The estimation dataset was restricted to 2004M01–2026M01; observations published after 2026M01 were not used. The analysed working dataset supporting the reported results is available from the corresponding author upon reasonable request.

Ethical Approval Statement: This study uses aggregate secondary macroeconomic time-series data and does not involve human participants, personal data, or animal subjects. Therefore, ethical approval was not required.

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