The Impact of expansionary austerity policies on some variables of the Iraqi economy: an analytical study

Abstract

Summary:
The results of expansionary austerity policies differ from one country to another. For example, in Greece, clear austerity measures were taken, such as increasing taxes, reducing subsidies, and reducing public sector salaries. It also included tax cuts for certain groups to mitigate the impact of other measures. In Brazil, this policy was effective and had an expansionary effect in stimulating Economic growth and reducing inflation rates, given that government spending in Brazil is less productive than private sector spending in the long term, which supports the hypothesis of expansionary austerity. Inflation Reducing the fiscal deficit, however, did not last long. The budget deficit and debt levels rose again due to the security shock in 2014 and the subsequent increase in military spending and the increase in debt due to the purchase of weapons and military equipment and the increase in the employment of military forces (the Popular Mobilization Forces). It can be said that expansionary austerity policies have had a positive impact on some economic variables in the selected countries, such as gross domestic product, inflation, and fiscal deficit, while in some variables they had a negative impact, such as high unemployment, indebtedness, and gross output, as happened in Greece. Therefore, the success and failure of expansionary austerity policies depends on providing the foundations and requirements. that enable these policies to achieve their objectives.